More Firms Downsizing Office Space By 20-30%
SINGAPORE – Property consultancy Cushman & Wakefield (C&W) believes there’s no straightforward answer to whether the office leasing market will return to normal after COVID-19 vaccines are administered and the pandemic has been surmounted, reported The Edge on Friday morning (15 January).
“What is certain is that occupiers are going for shorter lease terms to factor in a more flexible working environment,” said C&W’s Executive Director & Head of commercial leasing for Singapore, Mark Lampard.
Still, “an increasing number of companies have started to consider giving up 20 percent to 30 percent of their space as they implement some sort of permanent flexible work arrangement,” noted Ashley Swan, Head of the tenant representation team at Savills Singapore.
However, making a decision to slash office premises is not simple, Lampard pointed out. “In deciding whether or not to reduce footprint, corporate occupiers need to ask themselves – firstly, what does the workforce want. Many are surveying employees on the kind of work environment they want, and how often they will come into the office.”
“Secondly, what is the environment that will generate productivity and keep the levels at its optimum? And thirdly, how can organisations balance the three big cost items in operating a business: manpower, technology, and IT infrastructure and real estate?”
Moreover, Lampard explained that whether companies will return to their workplace will differ across sectors as their needs vary. Firms whose earnings have been reduced significantly will likely prioritise cost management, and will therefore be hypersensitive on property costs.
On the other hand, businesses that have not been significantly affected but have discovered they can still operate with less office space are expected to make changes in their workplace, but at a more deliberate pace, he noted.
Large firms may also be sluggish in institutionalising flexible work arrangements, as many multinational corporations (MNCs) need to follow global standards as well as domestic restrictions which may differ from one country to another, noted Savills’ Swan.
Nonetheless, Lampard thinks that as businesses reduce their office footprint, they will concurrently act to enhance the quality of their workplace environment “to create a place where staff want to be,” as well as improve IT infrastructure to allow a more versatile working environment.