‘Agile working’ cuts demand for space

8:54 PM Tuesday March 27, 2018 Colin Taylor

Co-working space like that offered by Generator in Britomart, Auckland, reflects a trend towards agile working. Photo / Supplied

Technological and flexible employment changes in office workplaces have driven two significant changes in the structural requirements for commercial property, according to new research. 

Unassigned seating and ‘agile working’ - or ‘activity-based working’ [ABW] - is becoming the norm; with the days of workers having their own desk or work stations being less common, says Zoltan Moricz, head of research for CBRE New Zealand. 

Third party space, co-working, and flexibility around the way space is used and leased, are other trends reflecting a wider transformation into agile workplaces, Moricz says. 

“Agile working is certainly having profound implications on the way office space is used and it’s interesting to see how this is born out in the market,” Moricz says. 

“Based on benchmarking the way occupiers use space, covering 126,000 square metres of space and 9000 workstations, we’re seeing two main structural changes in the broader market that can be related to a change in space use by office occupiers:

“The first is that demand among occupiers for high quality new space is strong. In the Auckland CBD in the past three years this has meant that essentially all prime space entering the market has been taken up.” 

Moricz says the second big change is the emergence of a ‘disconnect’ between employment and office space absorption - with employers requiring less space per employee. 

“During the 2000s the office space absorption growth exceeded employment growth. But since 2014 net office space absorption has increased significantly less than employment. The overall trend is clear: occupiers have taken nearly 10 per cent less space than they left behind in the buildings they relocated from.”

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This staff break out area in the newly-built B:Hive complex at Smales Farm is an example of ‘agile working’. Photo / Supplied

“This is shown in actual occupier relocations into newly-built space during the past three years with 80,580 square metres of former building space previously taken up by 19 corporate businesses reduced to a total of 72,250sq m of new A-grade building space. This reflects a net demand impact of minus 8330 square metres net overall.” 

Moricz says this research shows that organisations are looking to make more efficient use of space by encouraging a flexible and supportive workplace culture. 

“Activity based working is really taking hold due to increases in productivity when using spaces tailored towards a specific task such as creative brain storming.”

However, Moricz cautions that “true agility sits in the organisational realm” while workplace structures and new technology are “only enablers". 

“Agility is a paradigm shift in the way organisations work and there’s no doubt it’s having a profound impact on the property market. However, our question is: ‘Can companies effectively implement cultural transformation to become truly agile?’ 

“Cultural and structural changes are needed that impact on organisational structure and most organisations are struggling to achieve the transformation,” Moricz says. 

He says it will be interesting to see to what extent this trend continues as ‘true agility’ is dependent on how organisations create their cultures and systems for working, as much as on the physical structures of workplaces they occupy and use of new technologies.

“In the medium term, workplace practices may become disconnected from the organisational structure. What this simply means, is that through growth, many companies sooner rather than later run out of space.  

“This implies that the disconnect between employment and office absorption that has shown up in the past few years may be temporary; and could even lead to an acceleration of office space absorption a few years out as companies catch up on employment growth.”

Moricz also said that overall investors retain a strong investment appetite for real estate in 2018, with 92 per cent of respondents saying their investment activity will be the same or greater compared to 2017.

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Mug shot of Zoltan Moricz who is quoted in the story.