The global pandemic has affected the working environment of the people. Many people are into flexible working arrangement and this leads to the downswing of the occupied office space. Hence, will the emergence of the vaccines return the normal office working days? Or will flexible working environments become predominant in the new normal?
Mark Lampard, the executive director and head of commercial leasing for Singapore at Cushman & Wakefield (C&W) could answer these questions. He said that this is not a straightforward yes or no. He further said, “What is certain is that occupiers are going for shorter lease terms to factor in a more flexible working environment.” Midwood Condo should be highly sought after due to the recovery of the construction factor for residential properties.
Besides, Ashley Swan, the head of the department of Savills Singapore has noticed that there are many companies nowadays that are surrendering around 20% to 30% of their office space.
They are now turning into a permanent flexible work arrangement.
On the other hand, the flexible working arrangement could not be quite adapted by the bigger corporations. Swan explained that this is due to several MNCs that are not only opting for local restrictions but also cohering to global standards that may differ from each country. Please see Midwood for more details on the development.
Also, Lampard is optimistic that even though offices are declining, he believes that companies will enhance their office working environment for the comfort of their staff. At the same time, will improve their IT infrastructure for a better flexible working environment.
Boost of Tech and Finance Businesses
Meanwhile, there is something affirmative in the office demand despite its downsized. It is foreseen that there is a major office demand in the tech and finance sectors in Singapore particularly in the Chinese tech finance companies including the investment management companies and hedge funds. The CBRE claimed that the decrease in the occupied office space has dropped down in 4Q2020.
Office rentals are also affected by the current global condition. Knight Frank, the well-known property consultancy, anticipates a rental decline between 5% and 10% in 2021. It also stated that the average Grade-A rents may drop to $8.50 PSF per month.
Also, the CBRE predicts that in the early months of 2021, the Grade A (Core CBD) rentals will experience a downswing. On the other hand, it is expected that it will get better in the second half of 2021.
Upgrading Office Environment
Despite the demand for a flexible workforce, the C&W stated that the in-office workers could likely upgrade and improve. It said, “Many focus group participants agreed that innovation and creativity thrive when people are together and suffer when they are separated. “ It further said, “Unlike operational tasks and project update meetings, the creative process is often more ephemeral, organic and less scheduled.”
On the other hand, Knight Frank viewed this differently. It states, “There is… likely to be a shift in how a typical office is configured in the near future, with less emphasis on dedicated workstations and a move towards more innovation and collaborative spaces.” These include in-house cafes, big pantries, more meeting rooms, and open desk seating spaces that could also see more utilised space returned to the market, added Knight Frank.
