The performance of office over the long term

Workplace of the future
  • 19 Jun 2024
  • by
  • Micah Schulz
  • Fund Manager - APPF Commercial
The role of the office and workplace is changing in step with the way enterprises are evolving how they work to optimise productivity and efficiency. We spoke with Micah Schulz, Funds Manager - APPF Commercial at Lendlease for insights on the transformation of office to serve the future of work.

Why are tenants today increasingly seeking ‘places’ over ‘spaces’ when it comes to where they work?

Cities, and as a natural consequence, offices will play an increasingly significant role in our future prosperity.

The vast majority of our national wealth is generated in offices located in our major cities, and it’s where the greatest value and innovation originates.

People are hard wired to explore and discover. We want to be part of the energy and momentum that is unique to a CBD, however there is also a strong desire for convenience, high-quality amenity, green spaces for respite and a curated experience. This can only be delivered by intelligently designed places.

‘Space’ will never engender the magic that ‘places’ can. Places have personality. They have identity. They evolve and inspire an emotional response in ways that space alone never can. Organisations have recognised the power of thriving precincts in keeping their people engaged, inspired and happy.

We’ve seen significant examples of this confidence in precincts recently. At Barangaroo in Sydney for example, over 90% of tenants that are making decisions on their future space have chosen to recommit to the precinct. This represents over 123,000 sqm of leasing completed in the last 18 months and we’ve also seen new tenants coming into the precinct. And then there is the new Salesforce Tower within our Sydney Place precinct which is now fully leased.

Where, when and how we work has changed profoundly over recent years. With many organisations still challenged with workplace attendance, how do commercial buildings and precincts support the case for ‘earning the commute’?

The dramatic change in how we worked through the pandemic has prompted an overdue evaluation of why high quality workplaces matter and has been the catalyst for much of the recent activity in the office sector. The space rationalisation we’ve seen by some organisations is largely a reaction to a window in time, where workplace policies have been playing catch-up to evolving health, economic and cultural priorities. Now that things have stabilised, we’re seeing an overwhelming desire for quality and a focus on flexibility. People are choosing how they work and organisations are seeking to accommodate as much flexibility in both their policies and workspace to address this evolving diversity in working styles and formats.

Organisations are increasingly reassessing the investment they make in workplace against the significant investment they have long-made in people, and are understanding that even a small increase in what is spent creating a more attractive working environment can pay significant dividends through talent retention, attraction and improved productivity. Earning the commute comes down to one simple requirement: the workplace must be desirable. It must be easy to access. It must provide all the amenity that supports collaboration, convenience and wellbeing. And it must be inspiring. There’s no mystery why we’ve seen such a significant move away from ‘typical’ office space, to premium spaces situated in the heart of thriving precincts with direct access to transport and green space.

Lendlease has been an early mover in these trends. Quality, sustainability, flexibility, amenity, ESG and accessibility have always featured in our commercial precincts and buildings, so our portfolio has always been inherently future-ready. We have a long track record of leadership in placemaking and workplace innovation, and our customers are now reaping the benefits of our places.

What’s the future of workplace?

Convenience and amenity have always been desirable, but they are increasingly becoming mandatory attributes for contemporary enterprises. Seamless access to multiple modes of transport and a diversity of curated and convenient retail and professional services within the immediate vicinity of the workplace are absolute musts when it comes to bringing people together in the future. 

However, we’ve moved well beyond a need for great cafés and quality end of trip facilities. Integrating health care and essential services into our workplaces is a major focus, as well as offering engaging and diverse opportunities to support wellness and education. Sustainable, green spaces are now just as essential to the modern workplace as technology.

Large organisations are increasingly interested in exploring opportunities for shared spaces and amenity, including large meeting spaces, auditoriums and large scale commercial kitchens, which can be accessed on demand, and relieving the need for specialised amenity to be included in base fitouts and eliminating the cost of construction and underutilisation from the tenant’s bottom line.

And of course, we’ll see a continued emphasis on ESG, with a strong focus on embodied carbon and measuring carbon in all aspects of workplace structure and operations. Mandatory reporting and hard requirements to meet carbon targets means organisations must place a value on high performing assets. The importance of this for their culture and talent will continue to grow strongly as well.

This all means the demand for premium office will continue to grow. The recent leasing success at Barangaroo and Salesforce Tower demonstrates the value of high quality workplace anchored by intelligently designed and curated precincts. It’s clear evidence that workplaces that hit all the right notes are central to the success and ambitions of modern organisations. Companies thrive when people do, and our premium precincts provide the perfect environment to support individuals and organisations to reach their full potential.

Workplace of the future