[+] Why Seven Minutes Can Make or Break an Office Asset

It may seem like an arbitrary figure, but seven minutes could be the difference between success and failure in the office markets of Australia’s CBDs. New data released in a white paper by propella.ai shows office workers will walk up to seven minutes from their building. And the amenity of that seven-minute radius is key to the appeal of a workplace, according to propella.ai director Callan Cameron. Propella.ai captured de-identified mobile phone data to better understand worker activity metrics and behaviour. Cameron says buildings with high retail amenity, and good access to public transport and open space within the seven-minute catchment area are outperforming others in terms of worker activity. “This has implications for asset owners in terms of acquisition and repositioning. Well-located buildings that rate highly will attract higher rents and values will be higher,” he says. The data could also help to inform which assets could be ripe for conversion ▲ This isochrone map shows a walkable 7-minute radius around an office asset on Collins Street in Melbourne. Source: propella.ai The data Cameron is speaking of is based on propella.ai’s worker activity metric, which he says essentially measures the return to work across hundreds of buildings in Sydney and Melbourne. Cameron explains that CBD buildings are geofenced and de-identified mobile data captured within those buildings is segmented into workers and visitors to the building, to give a more accurate reflection of office occupancy per square metre. And it’s good news for office landlords such as Lendlease, who co-authored the white paper. The new work week Lendlease head of asset management Scott Meehan says while they don’t have a read on when worker activity is likely to stabilise, the trend is continuing upwards. “The data from the propella.ai report shows worker activity through to March 2023 in both Sydney and Melbourne CBDs was trending up. And recent re-cut of this data through to August 2023 shows that this continues to be the case in both capital cities,” Meehan says. “In Sydney mid-week activity has reached up to around 90 per cent of pre-Covid levels on peak days. What we do know for sure is that we can no longer rely on weekly averages to tell the story of what’s happening in our CBDs.” Meehan says a new work week model has emerged, with lower worker activity levels recorded on Mondays and Fridays. “So we have two questions to ask ourselves in how we respond. Firstly, can we change it? How might we enliven the places that we manage to draw people back into the office on those ‘slower’ days,” Meehan says. “We also need to address how we can adapt and the new opportunities that might arise for Mondays and Fridays when office occupancy is at a low. “We believe it’s a mix of both. We’re enlivening our places with a rich program of events and activities that mean something, we’re partnering with customers to reimagine the off-peak, and we’re paying more attention to what’s just downstairs in your workplace neighbourhood.” ▲ Lendlease is developing the Victoria Cross Station tower and precinct, which comprises a strong retail offering. And it is that neighbourhood that is becoming a linchpin in the return to work narrative. Office developers focus on local neighbourhood Workers will walk up to seven minutes from their workplace for their day-to-day needs, and they are choosing with their feet. “We’ve long known the value of thriving retail and amenity in driving thriving workplaces, so we’re doubling down on our commitments to enhancing the streets and laneways of our workplace precincts,” Meehan says. Lendlease has a number of new precinct projects in the pipeline, which all aim to capture the experience economy through retail offerings and street amenity. Meehan says Melbourne Quarter Tower is due to be completed next year, as well as Victoria Cross Tower in North Sydney. But it’s not only the shopping and food and beverage options in the office neighbourhood that are compelling for office workers. “The natural assets of our offices are perhaps more important than we thought—this includes the parks, the waterways and the fresh air,” Meehan says. “So we’re looking at new ways to connect workers with these natural assets. For instance, in October we’re launching walking routes across our portfolio to encourage workers to step outside the four walls of their office to engage in a team meeting, creative thinking or even just to destress.” ▲ Lendlease says access to good amenity in the local office neighbourhood is key to precinct development such as Melbourne Quarter, pictured. According to CBRE’s 2023 Office Occupier Sentiment Survey, the office remains a core component of corporate culture. Asia Pacific’s office sector has faired better than the global market with the strongest utilisation data compared to Europe and the US, and less than 20 per cent of occupiers surveyed are expecting to reduce their footprint in the next three years. The findings of the CBRE survey also point to the ongoing flight to quality, which the report says is a reflection of the “greater value many workers place on their work environment” compared to pre-Covid. “Locations and buildings that offer superior accessibility, sustainability and amenities are increasingly likely to appeal to occupiers and command a value premium,” the report says. The survey results indicate location, public transport and retail amenity are key drivers in office occupancy requirements. Meehan says Lendlease believes there is “opportunity for continued growth” as the office sector evolves. “Our Australian office pipeline, which includes the overstation developments of Victoria Cross Tower in North Sydney and Town Hall Place in Melbourne, demonstrates our precinct-led approach that we see as vital to creating the experiences that next generation workplaces demand,” he says. Most desirable building amenities for occupiers ▲ Office occupiers rank public transport and nearby amenity highly on desirable attributes of an office, according to the CBRE 2023 Office Occupancy Survey. “Companies, and the talent that makes them a success, are demanding more from their workspaces. “Tenants want to be in premium buildings, with exceptional amenities, underpinned by strong sustainability credentials in desirable and well-connected locations. “The creation of premium and A-grade sustainable office in activated places, anchored by transport hubs, is in demand as more organisations have ESG targets to achieve. And there’s a greater emphasis on flexibility and product diversity.” This was also borne out in CBRE’s survey findings, which pointed to almost half of Asia Pacific occupiers looking for flexible leases that managed costs based on space utilisation. The creation of attractive office neighbourhoods of the future will need to focus on workplace experience, placemaking and activation to lure office workers back to the office. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

Office
Taryn Paris
Thu 28 Sep 23

[+] Why Seven Minutes Can Make or Break an Office Asset

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[+] Why Seven Minutes Can Make or Break an Office Asset

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Taryn Paris
Thu 28 Sep 23