Shared lifestyle facilities could keep office tenants onboard in upcoming wave of supply
Designer hair straighteners, bike services and yoga classes are the unlikely elements of a new business strategy to woo office occupiers, as tens of thousands of square metres of new CBD supply come online this year.
As the relationship between occupier and landlord becomes more like customer and provider, the shift has pushed landlords to use “accommodation strategies” to remain competitive, Colliers International’s H1 2018 CBD Office Research and Forecast Report, released on Tuesday, suggests.
“Over the next supply cycle, those landlords that proactively meet this demand for customer-focused and flexible working environments (shared facilities, customer experience technology platforms, expansion space, end-of-trip services, health and wellness spaces etc) will attract and retain the top occupiers, and in turn, build the most attractive investment portfolios in the market,” the report said.
Landlords are luring tenants with free use of $500 Dyson hairdryers to go with their lunch-time yoga classes. Photo: Tyrone Branigan
Natalie Slessor, Lendlease’s general manager of workplace and change, said their customers want a full lifestyle offering to keep the best talent by creating the best places.
“If you’re trying to keep a tenant, the long view is you create a lifestyle work style for your tenants that is hard to leave, and (that’s) when it’s knitted in to your life beyond just work,” she said.
“The low hanging fruit would be childcare, fitness facilities, but also social facilities, food and beverage, coworking, business lounges that really add value and space for your tenants that they don’t have to pay for as a long-term lease.”
Barangaroo’s International Towers is one of the biggest flexible workplace precincts in the world. Photo: Lendlease
Ms Slessor noted that the role of the physical place is transforming.
“At the end of the day, we don’t have to go to the office to work anymore,” she said.
“When you want to attract people to be in your office, it’s got to be more than desks and chairs, it’s got to be about a whole lifestyle offering.”
In Sydney, where more than 23,000 square metres of net supply is due to hit the market in the next 11 months, real estate giants Dexus and GPT Group recently invested in building new wellbeing and end-of-trip facilities in their jointly owned Australia Square to stand out from the pack.
The facilities, named The Icon, has a wellness centre providing yoga, pilates and meditation classes, bathroom facilities including Dyson hairdryers, Cloud Nine hair straighteners and free towels, as well as bike racks and a repair station.
Doug Henry, Colliers International’s managing director of occupier services, expects office tenants’ demand for flexible and shared facilities will continue to grow this year.
“Flexible workspace and shared facilities within office buildings has become increasingly popular, if not a requirement, amongst tenants and particularly with larger organisations,” Mr Henry said.
“Long lease terms are becoming a hindrance and by utilising flexible workspace, an occupier can often minimise risk and cater for growth while ensuring access to third spaces, meeting rooms, event areas and training rooms.”
He added that his team is seeing cases where organisations are moving their entire teams into third-party flexible workspaces.
While the drive towards customer-focused work environments is a market-wide trend, CBD office properties are at the centre of this movement, said Anneke Thompson, Colliers International’s national director of research.
Vacancy rates are tipped to rise from 4.6 per cent in both Sydney and Melbourne to 5.3 per cent and 4.9 per cent respectively by January 2019, Colliers International data shows.
