Changing work dynamics inject new life into Hong Kong's prime office sector

working practices, a mental toll on some workers, refresh workspaces, Hongkong Land, Low vacancy rates, opportunities around the Greater Bay Area

Covid-19 has driven a well-documented shift in working practices, with work-from-home policies providing flexibility to previously office-bound roles. However, employees are showing signs of missing the social interaction and professional work environment provided by the office.

JLL’s latest Worker Preference Barometer, which asked respondents across Asia Pacific, revealed that employees would like to spend three days a week in the office on average, up from just two days in a year-earlier survey. The study found that working from home was taking a mental toll on some workers, with many craving a better work-life balance and a sense of belonging. Hong Kong’s lack of suitable home working space for most employees, creates a further challenge.

Companies are having to pay closer attention to employee health and well-being, reimagining their workspaces to create a strong sense of community and culture to attract and retain talent. The new work environment needs to offer an impactful variety, with different spaces for quiet work, collaboration and reflection, as well as access to areas for rounded wellness.

working practices, a mental toll on some workers, refresh workspaces, Hongkong Land, Low vacancy rates, opportunities around the Greater Bay Area

Two Taikoo Place, to be completed in the second quarter 2022, will create a building community that integrates wellness facilities and communal multifunctional working spaces, among others. Photo: Handout

This has driven a flight to quality in Hong Kong’s grade A office market. After a subdued 2020, during which companies focused on managing the short-term challenges created by Covid-19, pent up demand has started coming through in 2021.

Organisations moving premises are typically looking for larger floor plates that can be used as a blank canvas to create spaces that reflect their corporate ethos. This trend is particularly noticeable among large multinational corporations that may have occupied their current premises for multiple years and have layouts that are increasingly redundant against evolving worker preferences.

The need to refresh workspaces has coincided with an increased focus on sustainability, with many companies setting emissions targets. Corporate tenants are therefore seeking out buildings with globally-recognised sustainability and wellness ratings. Deeper partnership solutions with landlords are increasingly attractive as they support sustainability goals.

Landlords are responding to this with new sustainably-focused developments catering towards community productisation that brings greater amenity flexibility and facilities for talent that companies can leverage outside their own space.

For example, Swire Properties’s Two Taikoo Place, will create a building community that integrates wellness facilities, communal multifunctional working spaces, new food-and-beverage multi-concept offerings and events among others, alongside portfolio offerings.

Meanwhile, traditional Central market makers Hongkong Land have responded to the change in worker needs with Centricity; spaces and services in Central that boast flexible offices, meeting and conference facilities that connect their portfolio amenity through work and leisure.

Hong Kong has lagged behind global office markets like New York and London when it comes to wider occupier amenity. Low vacancy rates and the world’s highest rents do not always support the need to provide specific change.

Covid-19 accelerated changes in working practices and increased competition have motivated the market to move to the needs of its occupants in greater scale than recent history. This is a significant benefit for companies and the ultimate individuals who occupy the spaces.

This should only accelerate in the face of compelling new supply that includes Two Taikoo Place, The Henderson and Airside in Kai Tak. Sun Hung Kai Properties’ development above the High-Speed Rail Link terminus in West Kowloon, and Henderson Land’s development of site 3 on the Central harbourfront, are some of the medium-term opportunities that will continue to add to the dynamic evolution of Hong Kong’s office districts.

Demand is coming back. As always, it is led by the banking, wealth and professional sectors who are firming up plans for continued growth in Hong Kong, and the wider opportunities around the Greater Bay Area.

Coupled with significant demand from China in 2022 as borders reopen, supply will again come under pressure in a market that has a history of strong take-up of new buildings. All of which will be required to sustain the growth of one of the region’s powerhouse cities.

For now, occupiers have an opportunity to use the changes in Hong Kong’s real estate landscape and the infrastructure being created to leverage the physical space to help shape and endorse their culture and ensure talent has the right workspaces to thrive. It will not be too long before space is once again, at a premium.

Alex Barnes is the head of agency leasing at JLL in Hong Kong.

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