Archive for the ‘Workplaces’ Category

Are Savings Just Thin Air?

Thursday, April 25th, 2013

On a trip back to Scotland a couple of weeks ago, what jumped out at me was how much better the air quality was in comparison to Hong Kong.

This is far from a new topic, but realistically how do we address air quality in emerging Asia? In thinking of the interest groups and stakeholders involved this reminded me of the dilemma originally raised by ecologist Garrett Hardin. His theory tackled the socio-economic dilemma of a group of individuals when sharing a common resource. Known as “the tragedy of the commons,” this theory can be applied to a myriad of scenarios when society shares a common resource – in this case the wider environment.

In its simplest sense, the theory references the practice of medieval common grazing by herdsmen for their cattle. It goes something like this. Any single herder will have a personal motivation to add one more cow to his herd, because even if the results of adding additional cattle to his herd cause overgrazing and damage to the pastures, the herdsman receives all the economic benefit of adding those additional cattle, whilst the damage to the lands is shared by all.

Now, I’m not going to solve the air quality issues in Hong Kong in 500 words, but what is clear is that we all have a stake and responsibility in tackling these issues and this applies as much to real estate professionals just like myself. With a significant proportion of energy consumption being taken up by real estate, globally we have a duty and a responsibility to drive forward change to improve the impact we have on our “pastures.”

Now what Hardin did not address in his paper was technology. Technology provides solutions to problems. Yes we can legislate, but the winning argument in relation to real estate in this debate in my mind is simply the bottom line. When businesses start to see the savings and benefits to their bottom line of adopting more sustainable new technologies in real estate, adopting new best practice will just become the natural course. Technology is already moving fast and the real estate industry has some brilliant technologies at hand already.

The savings from sustainability are very real, not just on the impact we have on our “pastures” but on the bottom line. A great example is our new LEED Platinum office in Hong Kong. Our new office consumes 13% less energy per sq ft and better air quality has greatly improved the environment, indeed we’ve seen a 32% reduction in absenteeism.

I’m not saying technology has all the solutions now and that the payback times and the investment are not prohibitive at times. However, what is true is that the more it’s adopted, the more the costs will come down making it a more viable option.

A project we undertook in New York on the Empire State Building is a great example of how savings can be made even today. Not only did we deliver a project to improve sustainability which would pay for itself in three years by saving US$4.4m per annum in energy savings, the energy reduction and thus the impact on the planet, was in the region of 38%.

So the lesson is this, not only is the technology here to save us from a similar “tragedy of the commons,” but it’s improving every day. The savings to the bottom line are real and it’s up to us as real estate professionals to promote best practice in our industry. We can’t solve transport and factory pollution; however, with a little effort from all stakeholders, there will be some very tangible benefits for the wider environment and also the bottom line of developers, tenants and landlords – our clients.

About the author
Roddy Allan is a Director, Asia Pacific Research for Jones Lang LaSalle, based in Hong Kong.

Posted in Affordability, Air Quality, Asia Pacific, Asia Pacific Economy and Property Markets, Commercial Property, Corporate Real Estate, Economic Research, Economy and Real Estate Markets, Finance, Hong Kong, Occupier Strategies, Pollution, Real Estate Research, Sustainability, Technology, Urban Issues, Workplaces | No Comments »

WorkSmart Arrives In India!

Tuesday, October 9th, 2012

Jones Lang LaSalle moved its base in Mumbai recently to a more up-to-date office block. While the obvious difference in quality of the building and the availability of new age infrastructure and amenities gained positive reactions from the staff, it also offered all concerned the new experience of being part of JLL’s first “WorkSmart” program in India.

For those who are not familiar with the “WorkSmart” concept, let me explain how your typical employee would work. She would log in to the system as she entered the cubicle- less office in morning, receive the code for her work desk for that day, take charge of her desk-phone and laptop point and work there until she logged off in the evening! She would have a locker somewhere in the office for her belongings and with this system would have to adapt to a paperless way of working – a way of working that creates no waste paper but leaves a desk clean on top and underneath. Other JLL offices in Asia Pacific are also embracing the concept – read more about it from my research colleagues in Singapore and Sydney.

Although one benefit of the new system is that it encourages all of us to mingle with our co-workers, most of whom we know only by face, in my view, the two most important achievements that JLL made by this move in Mumbai were the huge 30% saving in its real estate costs and access for everyone to the top leadership. By doing away with cubicles and with this concept of a paperless office, I think we should be able to improve our productivity as well, with most of us able to plan our day better, optimise our field work, site visits, and client meetings and make our stay in the office much more enjoyable.

Is JLL in a minority in embracing this change? I suppose, yes, but as in real estate services, we are proud to be the pioneers! My researcher’s mind started thinking of the impact of WorkSmart on commercial real estate, and I think the concept will urge developers to be absolutely top notch in planning and delivering quality space at the right locations. It will force developers to raise their standards and be diligent about the feasibility of creating office blocks and this will lead to a significant supply correction going forward.

Just as in the retail business where the most important term is “trading density” (revenue per sq ft of retail space), the day is not far off when businesses will be measured on productivity per unit space.

Leo Tolstoy’s words – “How much space does a man need?” kept haunting me during our transfer to our new office and I am happy that we have now become much more efficient than before in consuming less space per capita. Thus, we have done our bit towards space and energy conservation and simultaneously gained improved productivity.

About the author
Ashutosh Limaye is the head of Research and Real Estate Intelligence Service, for Jones Lang LaSalle in India, based in Mumbai.

Posted in India, Workplaces | No Comments »

Working In a Dynamic Environment In Singapore

Tuesday, September 18th, 2012

Sitting in one of the regional offices of Jones Lang LaSalle in Singapore, I am constantly reminded of the high concentration of foreign talent here and the way our workspace dynamically evolves according to the needs of the varied teams based here, both locally and regionally.

Towards end-2010 and in the months following, Jones Lang LaSalle introduced WorkSmart Singapore – a pilot programme implemented across the Corporate Solutions workspace at our main headquarters in the Singapore CBD to increase the efficiency, flexibility and productivity of our work environment. A number of compelling reasons drove the need to create this programme: our business is growing, occupancy costs are escalating, demand for flexibility is increasing and the employees here want to work in an inspiring and productive environment. The WorkSmart programme which taps on our expertise in alternative workplace strategy provides a combination of non-traditional work practices, non-territorial activity settings and multiple work locations, which support the enhanced mobility of teams and individuals and more effective utilisation of workspaces. This all sounds very complicated as much thought has to be given from the planning to the implementation stage, but it is actually quite intriguing (imagine the traditional work benches/stations refreshed into new and attractive ‘hot desks’).

Now, less than two years since, the need to rationalise our existing business space has again arisen with the recent acquisition of Credo Real Estate, an independent market-leading real estate advisory firm in Singapore. Given that the integration of the business lines and teams along with a full rebranding of all business activities has just got underway, the most obvious actions to take are revisiting the existing workplace and considering how best to seat the combined 400 staff in the four office locations. Even though it may not always be feasible to apply such creative settings to an existing workspace (I am not speaking on behalf of the management or about the final seating arrangements they choose, as I am sure there must be a myriad of factors to consider in all such situations, including how quickly you actually need to find permanent space and the availability of swing space, etc), there is no denying that more firms are increasingly looking for more innovative uses for their work space and flexible ways to organise it in their quest to keep costs under control and still provide an interesting working environment for their employees.

As we start working with each other closely, I am sure the assimilation of both the existing Jones Lang LaSalle and former Credo Real Estate staff will be smooth and harmonious. I look forward to seeing familiar faces and making new friends in this vibrant workplace.

About the author
Koh Hui Yan is the Associate Director, Real Estate Intelligence Service Asia for Jones Lang LaSalle. She is based in Singapore.

Posted in Singapore, Workplaces | No Comments »

Workplace Contributes To Employer Brand In Asia

Wednesday, July 18th, 2012

Asia is ready for workplace change. Work is changing and the adoption of new technology is progressing fast. With this, mindsets around mobile working are maturing, and organisations are increasingly responding. A compelling trigger for change is the talent attraction and retention challenge that is maintaining its top position on the Asian CEO agenda, as pointed out in our latest thought leadership piece, Driving Effective Workplace Change in Asia.

Particularly in the largest cities, high-caliber talent is:

2010-2030 talent shortages and employability challenge map

Multiple factors are aggravating the situation. Expanding companies (both domestic and international) are vying for the same highly skilled talent in Asia without which they cannot achieve their global ambitions. In some countries, including China, the talent pool is shrinking because of an ageing workforce. In others, in spite of large talent pools, higher education curricula do not align with employers’ needs, leading to an employability deficiency with a double-digit proportion of candidates not meeting multinational companies’ standards.

For companies to become talent magnets, they have to improve their employer brands, an area in which Western multinationals used to be better equipped. Today, competition has become tougher with a number of domestic companies also armed with very strong brands. Aligning the workplace with organisational brand is important to provide work environments that materialise the brand’s promises and reinforce the stickiness of talent to the firm. Illustrations of corporate real estate’s (CRE) contribution to improving brand equity include the creation of “branded environments” and the sprouting of a new generation of cutting-edge campuses for India’s services firms.

The ingredients for success in the talent marketplace include offering attractive working environments, spaces that enable collaboration and facilities that promote health and well-being. However, physical workplace factors aren’t enough and CRE must consider the workplace as an expanded realm. Other crucial factors for talent attraction and retention include supporting individual technology preferences, enabling flexible work programs, empowering people to perform, rewarding them appropriately and providing them with access to experts and mentors. To achieve this, CRE will need to join forces with other departments such as HR and IT.

One of CoreNet Global’s CRE 2020 bold statements predicts the emergence of a super-nucleus of functions. Talent is an area where effective cross-functional collaboration is within reach. An opportunity that CRE teams are starting to seize in Asia.

About the author
Anne Thoraval is the Head of Corporate Research for Jones Lang LaSalle in APAC, based in Singapore.

Posted in Asia Pacific, Corporate Real Estate, Employment, Workplaces | No Comments »

70% Of Change Initiatives Fail

Thursday, May 3rd, 2012

Even with the best intentions, “the brutal fact is that about 70% of all change initiatives fail”. Workplace change is no exception. Few of the large multinational corporations exploring new ways of working have been able to roll out their change programs without encountering difficulties.

A series of barriers make it difficult to implement change such as lack of senior management support or visible engagement required to counter ego and legacy footholds; resistance of ‘rain makers’ to give up their big offices and the prestige that goes with them; mobility restrictions for certain employees and IT security issues.

In addition to these perennial challenges, when workplace change is deployed globally, a number of issues play out differently across Asia that may be less significant in Western countries. The diversity of local Asian cultures requires that workplace change programs be culturally adapted, not merely transplanted from west to east. Change programs satisfactorily implemented in the US or in Europe might not be as successful in Asia if cultural characteristics are overlooked.

Often compared to an iceberg, culture can be a difficult concept to grasp as assumptions, values and beliefs are often not articulated. Failing to address cultural issues as part of a workplace change initiative has serious implications for companies operating in Asia as they strive to improve talent attraction and retention and improve business productivity.

Our ‘guide to cross-cultural change’ infographic illustrates some of the macro-economic, real estate, and cultural variations that are vital to understand how to succeed in any workplace change program. A good starting point is to explore Geert Hofstede’s insights on national and organisational culture, with country scores for each dimension (“power distance”, “individualism”, “uncertainty avoidance”, etc.).

Next month, Jones Lang LaSalle’s Strategic Workplace Services team will release a publication helping companies grasp cultural complexities of the region in order to achieve sustainable workplace change. Watch this Space!

About the author
Anne Thoraval is the Head of Corporate Research for Jones Lang LaSalle in APAC, based in Singapore.

Posted in Asia Pacific, Corporate Real Estate, Workplaces | No Comments »

Activity Based Working: How Significant Will This New Concept Become?

Monday, October 3rd, 2011

In early 2012 Jones Lang LaSalle’s Sydney office will relocate to a new building within the CBD. The new, state of the art premises will operate on an activity based working scheme. Activity based working is designed to have less workstations and more communal areas, meeting rooms and quiet rooms. Workstations are unassigned, and employees will be armed with laptop computers and lockers for personal storage.

Activity based working offers corporate occupiers a range of benefits, but the main draw card is to reduce real estate costs by using office space more efficiently. In many cases office tenancies rarely run at full occupancy. In our case (Jones Lang LaSalle, Sydney) our average occupancy rate -people at desks- is approximately 45%. So the concept of unassigned desks allows corporate occupiers to have fewer workstations than employees and therefore a significantly lower workspace ratio (WSR). We estimate WSR’s for prime grade office space in Australia are approximately 1:15 square metres on average, but occupiers who have already adopted activity based working have been able to reduce their WSR to 1:10 on average.

So what does this mean for office markets and what does it mean for future net absorption?

At this stage there are only a handful of occupiers in Sydney that have adopted activity based working (representing approximately 2.5% of the market), but there is growing interest in the concept, particularly from those in the finance and insurance sector. The finance and insurance sector is forecast to account for 58% of total net absorption in Sydney CBD over the next 10 years. Therefore, if the proportion of tenants employing activity based working were to increase steadily to 58% by 2020, (and assuming that all activity based working schemes achieve a 1:10 WSR), the impact on total net absorption over the next 10 years would be -9.4%, that is, 620,000 sqm instead of 685,000 sqm.

However, it is probably too early to be building in such drastic assumptions to our base case forecasts. There are a range of reasons why the impact might not be that significant. 1. Occupiers may just use space differently rather than leasing less office space. 2. It may not be successful for everyone. 3. In almost all of the examples so far, it has only been employed in new buildings because it is most effective when floorplates are large, flexible and open plan. 4. Older buildings were not designed to handle the additional load of higher densities. Therefore, at this stage we don’t expect the impact on the market to be as significant as 9.4%, but we are monitoring this growing trend as a potential risk.

About the author
Andrew Quillfeldt is the Research Forecasting Analyst in Jones Lang LaSalle Australia, based in Sydney.

Posted in Australia, Forecasting, Workplaces | No Comments »

Lujiazui Commuting Challenges

Wednesday, August 17th, 2011

Both tenants and landlords will need to plan ahead for increasingly crowded conditions at the Lujiazui metro station in the coming few years, as the number of commuters dependent on the station may rise as much as 60% over the next 3 years.

Lujiazui Metro Station, on Shanghai’s Metro Line 2, is the most important commuter access point for the booming financial district in Pudong. The office supply boom in the area will result in significant overcrowding of the metro platform and access points. Tenants and landlords may need to consider shuttle buses to other nearby stations or staggering the workday starting times by 2013 or 2014, until the completion of an additional metro line (Line 14) provides relief sometime in 2014.

At the time of its completion in 2000, the metro station had ample excess capacity and was surrounded largely by empty plots. Today, Lujiazui station is already extremely busy at peak hours. By end-2014, another 787,000 sqm of office will be completed near the station, bringing thousands of additional office workers into the area. While some are coming in on cars and buses, the majority are arriving on Metro Line 2. Many of the new Lujiazui workers will be in the new insurance and bank towers which are consolidations of offices from elsewhere in the city.

To calculate the increased traffic at the metro station, I estimated the physically occupied space in each nearby building. By year end-2014, most buildings will be virtually full, with the Shanghai Tower megaproject in the process of handing over. Adjusting for the distance to the Lujiazui station versus other nearby stations like Dongchang Road that may be viable alternatives, the outcome is that the physically occupied space attributable to Lujiazui station goes up 60% by end-2014. In the best-case scenario, assuming more commuters shift to other forms of transportation, the increase could be as low as 25-35%, but this is still cause for concern.

The next metro stop to be built to directly serve the Little Lujiazui area will be Line 14, expected in 2014 at earliest. Until then, landlords and tenants in the area will need to plan for ways to make the morning commute smoother for thousands of financial sector workers to ensure their buildings and workplaces can remain competitive.

About the author
Steven McCord is an Associate Director in Jones Lang LaSalle’s research team in China, based in Shanghai.

Posted in China, Office Research, Workplaces | No Comments »

Where is Bangkok’s CBD?

Wednesday, June 29th, 2011

Depending on whom you ask, Bangkok’s central business district can actually be one of numerous locations across the city. From the days when the Chao Phraya River and the city’s intricate canal network provided much of the infrastructure for commerce, to an era when residents and visitors had few alternatives to spending much of their day stuck in the notorious road traffic, the biggest influence on how the city works these days is the mass transit infrastructure, BTS skytrain and MRT underground. As a result, rather than having a single commercial heart, the city is evolving around key nodes with a blend of high density office, retail, hospitality and residential developments clustering in these areas.

Coinciding with the launch of a high profile residential project, five business groups will collaborate to establish “Ploenchit City”, a new central business district between the Chidlom and Ploenchit BTS stations. The area already offers its fair share of office, retail, hotel and residential space, but new development includes the Park Ventures office/hotel complex, Central Embassy and Park Hyatt hotel, and the Noble Ploenchit condominium development. The group expects traffic to rise from the current level of 50,000 people per day to over 200,000 by 2016.

The initiative could shift some of the momentum built up by development around the Asoke-Sukhumvit intersection over the past couple of years. The relocation of Citibank to the recently completed Interchange 21 at the Asoke-Sukhumvit intersection highlights a shift towards density being realized at these infrastructure nodes. Also at the Asoke-Sukhumvit intersection, Exchange Tower completed in 2006 was one of the first office buildings to link directly with a BTS station. Meanwhile, the completion of Terminal 21 at the end of this year will be the first major retail center linking to the Asoke-Sukhumvit BTS sky-train and underground MRT stations.

And despite these recent developments, the Chong Nonsi intersection, at Sathorn and Narathiwat Roads, still offers the largest amount of grade A office space. The Bangkok Metropolitan Authority recently completed construction of the platform over the intersection which allows easy pedestrian access between the BTS and Bangkok Rapid Transit stations as well as the many high quality buildings in the area. The recently completed Sathorn Square office building, built in conjunction with Bangkok’s soon to be first W Hotel has further raised the profile of this already prominent intersection.

In all these areas, individual commercial developments are less able to stand alone on their own and are increasingly reliant on integration with the infrastructure and other buildings in the area. Other key mass transit locations also comprise high density commercial and residential offerings, and new development plans are already entering the pipeline. As these nodes evolve and attracting traffic becomes increasingly competitive, we can expect to see more collaboration among landlords and developers promoting their area as the best commercial zone in Bangkok.

About the author
Dan Tantisunthorn is the Head of Research for Jones Lang LaSalle in Thailand.

Posted in Demography, Investment Research, Land Supply, Office Research, Thailand, Workplaces | No Comments »

How are Corporates Tackling Rising Accommodation Costs?

Monday, June 20th, 2011

Last week I was a panelist at a Nomura conference where we discussed the concept of fungibility of office demand. An interesting word “fungibility” – meaning in this context the extent to which office space in one location can be interchanged or substituted with space in another location. This topic is being discussed increasingly as rents rebound across Asia Pacific following the Global Financial Crisis. In some markets, namely Greater China, rents are almost back to previous peak levels. As accommodation costs rise, are corporates deciding to pack up and move to cheaper locations?

The answer is more complex than that. Accommodation costs typically account for only around 10% of total operating costs, far less than staffing costs which are around 60%. And crucially, businesses need to have a presence near their customer base. In the case of Hong Kong, the region’s most expensive office market, demand for space has been buoyed in the last couple of years by strong growth of the financial services sector including Mainland Chinese banks as well as MNCs wanting proximity to China. Over the same period, average grade A rents in Hong Kong’s CBD have increased by 50%, raising questions about affordability.

More generally corporates across Asia Pacific have returned to growth mode but at the same time are operating in a continued environment of cost constraint. So how are they tackling the challenge of increasing rental costs? Through a variety of strategies including:

• Decentralisation. In Hong Kong, most submarkets are at least 50% cheaper than the CBD.
• Moving operations that are not location dependent. We are seeing a trend of back office functions being moved to low cost centres which have the required skill base including India, the Philippines and second tier cities in China such as Dalian.
• Alternative workplace strategies. Open plan seating, hot desking and the increasing use of mobile technologies are enabling corporates to reduce their office space requirements.

Expect to hear further discussions on the topic of fungibility as office rentals continue to rise across the region.

About the author
Dr Jane Murray is the Head of Research, Jones Lang LaSalle Asia Pacific.

Posted in Asia Pacific Economy and Property Markets, Corporate Real Estate, Workplaces | No Comments »

So you work in an office?

Thursday, June 16th, 2011

Every week-day morning around two million Australians tumble out of bed and, with varying degrees of enthusiasm, go to work in an office.

Nothing surprising about that – but if you are an office worker, here are a few questions.

Firstly: did either your father or mother work in an office? If the answer is “yes”, then here is a second question: did any of your grandparents work in an office? If the answer to all these questions is “yes” then you are a third generation office worker, and this makes you are a very rare person indeed.

I estimate no more than 5% of today’s office workers in Australia are descended from two generations of office workers.

It can be argued that a generation is a long time. But commercial property assets have long life expectancies. Almost half the Sydney CBD office stock is 30 or more years old.

Does this matter? Perhaps not, but here is a fourth and final question – do you think that your grandchildren will work in an office? If the answer is “yes” then you believe that the waves of demography and technology that propelled so many of us from farms, factories and corner stores and into offices in just three generations have suddenly skidded to a halt.

The facts suggest otherwise. The pace of change seems to be speeding up, not slowing down.

A popular metric of efficiency in the use of office space is the workspace ratio – the number of square metres of space occupied by each office worker. A typical office workspace ratio is 15 square metres per person. Reliance on simple metrics can be handy but risky. Technology is freeing up office workers to leave the office. Occupancy in offices has been falling and is now often between 40% and 50%. A 40% occupancy rate means that the average workplace is only occupied for two days out of a five-day working week. That’s expensive space.

No-one knows for certain how these trends will play out in the future. Rules of thumb like workspace ratios and turnover per square metre in shopping malls are convenient short term indicators. But prepare for a life of surprises: Technology is challenging many of these benchmarks. Property investors make big commitments to assets with a long life expectancy. More than any other sector of the economy, property investors and developers need to think outside the box.

About the author
David Rees is the Head of Research for Jones Lang LaSalle in Australasia, based in Australia.

Posted in Demography, Technology, Workplaces | 1 Comment »