COLLIERS INSIGHTS OCCUPIER SERVICES | APAC | NOVEMBER 2020

WORK³ THE FUTURE OF WORK

WELCOME TO THE FUTURE OF WORK

Rising demand for remote/flexible working arrangements, supported by connected technologies

De-densification and decentralisation of work locations to reduce health and operational risks

Increased focus on the health and well-being of the workforce

Occupiers in Asia Pacific are bracing for a new era of work. As economies and businesses emerge from crisis mode, it’s clear that COVID-19 shifted major forces that were already in the process of accelerating the working environment into overdrive, namely:

The acceleration of these trends means companies can no longer take a ‘wait and see’ approach. The real estate and workspace strategies developed in decades past will need to evolve to become fit for the future, and to support growth, productivity and competitiveness over the long term.

This journey will present both challenges and formidable opportunities. Occupiers will have to adapt to workers performing their duties remotely; to applying technology to optimise environmental conditions and the use of corporate facilities; and to managing more complex real estate portfolios in real-time. At the same time, there’s never been more potential to liberate work from location and capacity constraints; to build flexibility and resilience into real estate portfolios; and to enhance employee productivity, well-being and engagement.

> Reduced headquarter density

> Decentralisation and de-risking of operations

> Increased adoption of flexible workspace models

> Facilitation of remote working/work from home

PLACE Multiple work locations

> Lower-density, high-efficiency workplaces

> Improved health protocols and wellness facilities

> Enhanced environmental conditions

> Creation of employee choice

SPACE The workplace experience

> Cloud-delivered services

> Connectivity supporting collaboration across workspaces

> Adoption of the Internet of the Workplace (IoW),5G and AI

> Cloud-based facilities management

PACE Technology-driven productivity

WORK ³WORK³ is a platform of research, advisory and specialised services designed for a new era of work to help occupiers successfully navigate the accelerating changes in the future of work across three dimensions.

As the nature of work evolves, so have our services and approaches to better create and seize opportunities for our clients that are emerging in a rapidly changing environment, and to meet the growing demand for expertise on rising trends like flexible workspace and workplace wellness. While the new reality of work will certainly come with challenges, it should be understood as a transformation that has the potential to ultimately benefit occupiers and their workforces alike and to lead our industry into the future.

SAM HARVEY-JONES Managing Director, Occupier Serices, Asia

For occupiers the key steps in this transformation will include:

Restructuring the office portfolio, with opportunities to incorporate more decentralised and flexible workspaces to enhance resiliency and optimise costs.

Reinventing the workspace to reflect a new focus on hygiene and employee wellness, and to support employees working from home and other locations. Colliers’ workplace advisory, project management and wellness solutions practices offer practical strategies to reshape physical spaces in a way that optimises the working environment and employee experience.

Enhancing technological capabilities and connectivity to effectively extend the boundaries of the workplace, enabling teams to convene and collaborate effortlessly across locations, and using data to improve the utilisation and management of real estate assets. Occupiers can access Colliers’ technology consulting, real estate management and corporate solutions services for insights and expertise on creating networked environments and drawing on data to make better real estate decisions.

1

2

3

6 |

Optimising the multiple locations of the workplace

PLACE

Combining anchor offices and split office locations can provide greater flexibility for employees while helping optimise costs, and should become the default approach.

DOUG HENRY Managing Director, Occupier Services, Australia

| 7

Decentralisation has gained pace in Asia Pacific with central business districts (CBDs) becoming more expensive and technology making it more feasible to distribute operations. Not only will this trend continue, but the nature of decentralisation will change as companies re-examine the risk of concentrating key staff in single locations.

Head offices might continue to be located in the CBD, but we anticipate a different mix in the way decentralised offices function.

The other major change will be in density. The days of ‘racking and stacking’ to cram the highest possible headcount into a workplace are over. Companies will need to ‘de-densify’ offices and include more collaboration and breakout spaces to give employees more room to circulate. While de-densification may eliminate

WORKFORCE DESIRE TO WORK FROM HOME

some of the cost savings that come from using space at maximum efficiency, other factors have the potential to offset this.

Firstly, the rise of remote work and work-from-home arrangements mean fewer employees are likely to be in the workplace at any one time. Colliers’ recent Global Work-From-Home Experience survey showed that a clear majority of office-based employees hope to work from home at least part of the week post COVID-19.

Secondly, technology and greater availability of flexible workspace will allow companies to explore ‘flex and core’ structures where central offices are slimmed down and supported by secondary locations, whether they are offices in decentralised business districts, or flexible touchdown spaces in city centres that can be occupied by teams as and when needed.

Source: Colliers’ Global Work-from-Home Experience Survey

> 4 days14%8% 10%

23%17% 24%3–4 days

46% 55%50%1–2 days

17% 20%16%< 1 day

Asia Pacific Americas EMEA

8 |

Prioritise portfolio management

To prevent upticks in capex, companies need to restructure their real estate portfolios to incorporate more flexible space models and a wider variety of leases, so overall footprints can flex and wane depending on market conditions. Organisations that move to rationalise and optimise their entire portfolios will have the ability to reduce fixed costs long term; not necessarily just by occupying less space, but by creating the flexibility to adjust as businesses grow as certain locations become more or less important, or as they move to explore promising emerging markets.

Seek more from flexible spaces

The new focus on health and a more volatile business environment mean occupiers should expect more from flexible workspace operators. Operators that can offer more amenities around health and wellness – gyms, breakout spaces, meeting rooms – are likely to be more successful. Enterprise-level arrangements are also going to be more important.

In the end, rather than adopting a ‘one size fits all’ approach, occupiers should work with a corporate real estate expert to evaluate the full spectrum of space and leasing options, and tailor a workplace portfolio in line with their business needs. Offer employees optionality

Giving employees the choice to work from home or other locations should be seen as an important means to reinforce the resiliency of the real estate portfolio.

STRATEGY RECOMMENDATIONS

We see our role as providing the expertise, market experience and connections to deliver the right solutions that allow a client to develop a dynamic real estate portfolio that’s capable of evolving with the business.

| 9

Many occupiers don’t realise to what extent things have changed, and that there are innovative new models available to them that may not have been feasible in past.

Operators who can partner with occupiers to understand what they want and plan their portfolios accordingly – providing flexibility across one or multiple sites in the same or different geographies – will be in the lead.

ABHISHEK BAJPAI Managing Director, Corporate Solutions, Asia Pacific

JONATHAN WRIGHT Director, Flexible Workspace Services, Asia

10 |

Multi-dimensional enhancement of the workspace experience

SPACE

The increased awareness of wellness and hygiene requirements will prompt businesses to rearrange workplace infrastructure to facilitate the new normal. Two particular aspects of the workplace will become more prominent post COVID-19 – the undeniable dependency on technology, and flexibility in how and where people work.

TRUDDY CHEUNG Director, Workplace Advisory, Asia

| 11

Strongly disagree 8% 9%9%

Strongly agree 27% 19%23%

Disagree 27% 28%28%

Agree 38% 40%40%

Distancing and de-densification measures may ease, but employee health and well-being will be a lasting priority and workspaces will develop to contribute to the cause. In ‘traditional’ offices, standard operating models will incorporate more frequent cleaning of high-touch surfaces and common areas, and sanitary protocols will be stricter. Employee and regulatory demands will also encourage companies to adopt technologies to monitor and optimise the use of common facilities like meeting rooms and pantries, while meeting health and social distancing requirements.

The workplace is likely to change in terms of its functionality and size in the short and medium

to long-terms. There will also be greater recognition of the role environmental conditions and positive habits play in promoting wellness and productivity. This will drive adoption of devices like air quality monitors and encourage occupiers to carve out health-related facilities, from exercise rooms to quiet spaces, in the workplace. At the same time, as the boundaries of the office expand, companies will need to consider how to effectively promote positive health outcomes across multiple locations, and make it viable for employees to work where they choose while still enjoying consistency in terms of standards and experience.

WORK-LIFE BALANCE HAS IMPROVED

Source: Colliers’ Global Work-from-Home Experience Survey

Asia Pacific Americas EMEA

12 |

Approaches for various workspace scenarios

With more employees working remotely, health measures will have limited impact unless they can also be carried over to the home environment. Occupiers need to consider how to enable employees to work just as conveniently, safely and effectively from home as they do at the office, so the outcomes are the same from a wellness perspective. This means addressing conditions such as physical setup – ensuring employees have desks and chairs that are ergonomic and that allow them to work comfortably and productively from home.

Remember wellness is about the mind as well as the body

New ways of working have implications for mental as well as physical well-being, and hence employee performance. Colliers’ recent Global Work-From-Home Experience Survey shows working from home tends to improve work-life balance, though the positive impact was less pronounced in Asia Pacific versus other regions. However, over one-third (37%) of survey respondents also reported feelings of isolation associated with working from home. This underlines the importance of fostering a sense of inclusiveness with employees, regardless of where they are.

Rapidly shifting norms and expectations around health and wellness may pressure occupiers, but it’s important to keep in mind that progress doesn’t always require starting all over again. Enhancing the workspace doesn’t necessarily mean creating a new workspace altogether.

STRATEGY RECOMMENDATIONS

View workspace improvement as a long-term investment

Actions like boosting cleaning regimens, adopting environmental technologies and redesigning workspaces to incorporate more wellness facilities all have the potential to raise costs initially. However, workplace improvement is an opportunity for occupiers to introduce changes to the built environment that lay a foundation for greater efficiency in the use of space and a more engaged workforce over time, contributing directly to the bottom line, as well as talent engagement and retention in the process.

Our services are designed to help occupiers build on what they have, by identifying and executing incremental improvements that have outsized impact on the quality of the environment and the well-being of employees, wherever they happen to be.

| 13

When people feel supported and trusted, there’s an increase in productivity; however, if they’re left feeling undervalued, it creates anxiety and can lead to different levels of stress.

14 |

PACE Connecting environments to enable productivity gains in work pace

We see an accelerated reliance on the IoW and cloud technology that allows people to reassess their space utilisation and distancing, similar to contact tracing throughout the workplace, and from a real estate management perspective, better management of clouded/automated facilities as well.

MICHAEL BOWENS Executive Director, Regional Tenant Representation, Asia Pacific

| 15

67%Being able to collaborate with colleagues in person

31%Spontaneous meetings

52%Work-life and home-life being separated

21%Easy access to my manager

57%Bumping into-coworkers

31%Regular lunches

45%Non-work related conversations with colleagues

17%Clarity of my priorities

Across Asia Pacific, adoption of cloud-delivered enterprise services and connected devices remains brisk, with spending on public cloud services (i.e. those provided over the public Internet) expected to roughly triple by 2023 to nearly US$80 billion. This is supporting the continued emergence of the Internet of the Workplace (IoW), which is the combination of physical and virtual enterprise architecture that connects businesses and employees, enabling them to perform and collaborate anywhere, in real time. This evolving infrastructure can boost productivity overall by allowing workers to choose their devices and

workspaces, and to assemble teams best suited to the project or context, supporting on-demand, location-agnostic methods of working.

By networking the built environment, the IoW also gives occupiers more control over their physical spaces, including access to and use of assets like lifts, workstations and meeting spaces.

WHAT PEOPLE MISS ABOUT WORKING IN THE OFFICE

Source: Colliers’ Global Work-from-Home Experience Survey

16 |

Turn data into a resource

With the cloud providing on-demand capacity and software, and connected devices and spaces generating more information, occupiers will be able to apply data to real estate strategy like never before. A greater amount of data allows for greater data aggregation and analysis, data will be absolutely priceless because it will help businesses make better real-time decisions around real estate. Given the overall costs of real estate are still high, if occupiers can become more effective and efficient in the way they use space it will only be beneficial; however, we should always remember productivity, not technology itself, is the end-goal.

Address complexity with automation

Tapping into the potential of technology to automate aspects of facilities usage and management will help occupiers cope with the additional locations and complexity that decentralisation and de-densification are likely to bring. Touchless technology is gaining ground as a means to provide access to services and share facilities more effectively, it allows occupiers to predict peaks of usage and adjust the control and distribution of resources accordingly, reducing friction and accelerating the pace of the workforce as a whole.

STRATEGY RECOMMENDATIONS

Cater to the collaboration experience

Colliers’ recent Global Work-From-Home Experience Survey shows collaborating with colleagues in person is what people miss most about working in the office, so occupiers should make IoW-enabled collaboration as seamless and as close to the real thing as possible. Creating the right digital workspace is essential for companies to get the most out of their workforces, it’s important to acknowledge the benefits of collaboration technologies and enable people to engage at different levels and not just over voice calls. Over 30% of people feel more connected when they use a camera, for example, and some apps have tools that allow teams to whiteboard and brainstorm, leading to genuine interactions and meaningful conversations.

| 17

In essence, pace is altering work in a way that requires every occupier to become - to at least some extent - a technology company. We recognise for a lot of firms this is not their core business, and that they may not have all the capabilities needed to realise the Internet of the Workplace internally.

Our technology consulting and corporate solutions team help clients bridge that gap, by drawing on our experience with networked and cloud-based environments to tap the full potential of the automated, connected workplace.

18 |

NEXT STEPS

WORK³ is a combination of trends that will play out for occupiers, not over months, but in the future of work – though as always, the early responders are likely to be in the best position to benefit. Colliers’ experts advise occupiers to prioritise the following actions in the short term:

Reassess real estate portfolios in light of new realities

With health and risk management measures set to rewrite cost calculations in CBDs throughout the region, companies should:

Once they understand the cost-value, exposure and the direction in which their industry is headed, they can start to consider technology, opportunities for effectiveness and efficiency, and how to build in flexibility.

1

Conduct an honest assessment of whether legacy real estate arrangements are likely to be effective.

Take a holistic view of the entire real estate portfolio and evaluate whether it’s fit for purpose.

Consider whether they need to be in certain locations, whether they are able to grow headcount and whether it is cost prohibitive.

Raise work from home/remote work standards and practices

Businesses should take steps to ensure that working from home or remote working is squarely on an equal footing with working from the office by providing employees with the right equipment, investing in technology to ensure they continue to feel connected to managers and colleagues, and conducting regular check-ins. Companies may have wellness experts, air sensors and ergonomic devices in the office, but they need to start thinking beyond that; creating the right setup for working at home to ensure mental wellness and prevent feelings of isolation will be vital.

Assess your IoW-readiness

The cloud and connected technologies will be the defining factors in ensuring workplaces are healthy, efficient and cater to employee productivity, both within the office and at a distance. That means workspaces and real estate investments must be measured not only in terms of factors like location and rates, but to what degree they’re technology-enabled; the infrastructure that enables people to work regardless of location will be integral to business activity and competitiveness from now on.

32

Ultimately, occupiers should see WORK³ as an evolving journey. Technological innovations will continue; buildings, leasing models and property markets will all develop in response to new economic and social norms, and emerging demands.

A real estate environment in the midst of rapid and profound change is best navigated with the guidance of a long-term partner that is not just dedicated to the field, but also possesses the right expertise, market experience and connections that allow the business to manage risks and seize opportunities across the Place, Space and Pace dimensions.

For more insights into WORK³ and the solutions developed by Colliers to enable clients to adapt and thrive in the future of work, visit WORK³ or contact us.

WORK ³

It’s not enough anymore to simply keep abreast of trends in the market. We’re working constantly to anticipate trends, and ensure we develop a deep understanding of how they will impact occupiers now and in future. The forces of WORK³ are changing the needs of occupiers and expanding their priorities to include things like connectivity, wellness and sustainability. With practice areas and services that span all these considerations, we are well-equipped to act as a trusted advisor for the long term, and to help our clients harness the forces of WORK³ to build and grow more resilient businesses.

Contact our experts

SAM HARVEY-JONESManaging Director | Occupier Services | Asia Sam.Harvey-Jones@colliers.com

DOUG HENRYManaging Director | Occupier Services | Australia Doug.Henry@colliers.com

ABHISHEK BAJPAIManaging Director | Corporate Solutions | Asia Pacific Abhishek.Bajpai@colliers.com

MICHAEL BOWENSExecutive Director | Regional Tenant Representation | Asia Pacific Michael.Bowens@colliers.com

TRUDDY CHEUNGDirector | Workplace Advisory | Asia Truddy.Cheung@colliers.com

JONATHAN WRIGHTDirector | Flexible Workspace Consulting | Asia Jonathan.Wright@colliers.com

This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and/or its licensor(s). ©2020. All rights reserved.