New Forces in Office Space
JANUARY 21, 2019
Office premises have never been more serious than they are now as the place for attracting worker talent. In fact, with low growth in salaries and wages globally, this variable is in hyper mode. This is resulting in the transfer of power from traditional landlords to occupants regardless of the historic indicators, like low vacancy and increasing rents which always favour the landlord.
In the cases of the mega technology companies (FAANGs) they are blurring the traditional landlord and tenant relationship by actively buying buildings, fashioning them into desirable workplaces and occupying them. Like an unsatisfied diner at a restaurant they are starting their own fancy restaurant on the basis that the general market offerings are either stale or unappealing. The top technology companies have common business strategies like “think then challenge” and “fail and learn” already inbuilt in their DNA so property; where super wealth is created by farming annuity income in an orderly manner, is right in the firing line.
We were given a wonderful opportunity to listen to Knight Frank Partner, Andrew Tyler – Head of Central London Office Development address our clients and staff on Global Precinct Activation this week.
His messages were fascinating – that occupier demands of office space are changing supply, the shift away from traditional landlord/tenant relationship and the new gap where flexible premises and shorter term leases are desirable for business. The recognition of Wired Score certification for digital infrastructure and the impact of long leases on tenant balance sheets.
Kymbal Dunne and Andrew Tyler
Andrew is well travelled and draws heavily on his experiences in London, throughout Europe and the US where he has been involved in many significant market leading projects and studied a number of others to share global trends. His examples included Bloomberg’s European HQ in London, the winner of the Stirling Prize 2018 for a new office development, with flexible communal meeting areas, magnetic changeable timber tiled floors and double helix central stairs, a sympathetic repurposing of industrial space conversion of the Singer Sewing machine factory in Berlin, transformation of Stratford’s London 2012 Olympic Park Press and Media Centre to an award winning Technology Hub, known as Here East. He also gave us an insight in to the way architecture was become an important factor in occupier’s decision making and cited the example Rothschild Bank HQ, New Court, London, where Rem Koolhaus (OMA) designed their new building having never designed an office building in London before. OMA partnered up with a “local” firm of architects, to deliver the building in an environment of complex construction controls.
The themes were also warnings for Australian property, as wealthy occupiers are leading the charge with ground breaking design and amenity. We’ve already seen the gap being filled by Co-Working models but some occupiers have become developers and are appointing their own architects and funding changes and improvements. With recruitment and retention of skilled people paramount to business, the workplace has become even more important. Tired environments are not places for the best businesses as many HR “exit” interviews confirm. Each company is striving to be relevant, attractive and a place where people want to work (key in the ever relentless war on talent).
Bloomberg wants their people to exercise by moving through the building and coming into contact with each other on wide stairs. They see the value in opening opportunities for them to stop and mingle. They have resisted their own branded building food solutions which capture staff in favour of breaking out of the space from time to time. Bloomberg’s have agreed to offer five of the best London Chefs restaurant space so that a variety of the best cuisines are available close by, with securing rental income at the bottom of the list of priorities for Bloomberg.
Wired Score ratings give recognized credibility to the delivery of data, the speed of up and downloading and how the building deals with chance to the IT infrastructure.
I was lucky enough to take Andy and show him an important client asset close by. I was searching for new ideas and once he saw the building he immediately remarked that such an historic building needed to be celebrated. He meant that the opportunity exists to open up the building and invite people to see all the features instead of hiding them behind a narrow office lobby for the enjoyment of just a few. Like the Bloomberg example, the building should be one where the occupiers are keen to show their colleagues and friends the place where they work – a building to be proud to work in.
It is real benefit to be able to draw on the skill set of colleagues from around the world. Having returned from the US clear about the emergence of Urban Campuses and that impact on cities I am now also in clearer on Precinct Activation. Both are forces for centralization and will encourage workers to come or stay in cities. This begs the question what will the drivers be for decentralization which Governments collectively desire as they try and spread the population load?