Colliers’ Hong Kong Occupier Survey 2018 seeks to understand occupiers’ real estate strategies in the city’s office market. The survey highlights some insights into trending topics; the current and future business outlook, the demand for office space, workplace strategies and flexibility in offices as well as leasing terms, and a few others. Occupiers surveyed for the report included global companies from several industries, such as: banking and finance, information and technology, sourcing and trading as well as beauty, medical, health or wellness. Some of the key takeaways include:

Current business sentiment is positive

From a pool of 295 respondents, 90% have a positive to stable business outlook that has had little to no impact from the rising interest rates and the US-China trade dispute. Furthermore, demand for office space is and remains positive, with only 6% of those surveyed planning to reduce their office space.

New economy sectors take the lead

Compared to some of the traditional economic sectors, namely banking and finance, professional services, and trade and logistics, sectors from the new economy – companies in technology, media and entertainment, information and communications, beauty and medical, as well as health and wellness, have a much more bullish outlook on the general business climate and their expectations for expanding their offices. More than 50% of companies in the new economy sectors plan to expand their square footage in the coming years.

Medical and beauty is one of the new economies currently taking the lead, prompting landlords to provide additional medical floors in office buildings in Causeway Bay and Tsim Sha Tsui.

Mainland firms are pulling back

Compared to last year – 2017, the demand for office spaces from mainland companies has reduced. This is because of changes in the macro-economic context, in which tightening regulations on overseas investments and China’s slowing economic growth, have caused mainland firms to be more cautious about their expansions. As a result, we expect Central’s office market to face a few headwinds in 2019.

Employees and tenants are looking for greater flexibility

In terms of workplace policies and employee experience, companies are showing a stronger interest in alternative workplace strategies, such as Activity-Based Working (ABW), to enhance their brand image and attract younger generations of talent. Facing a fast-changing business environment, companies are being encouraged to adopt an agile mindset by having to review and restructure their office requirements more frequently; moving towards a flexible workplace that allows their employees greater choice in terms of working areas, benefits such as gym and healthy nourishment options, and amenities promoting sustainability and wellness.

The flex-core model is one of the strategies being deployed, which combines flexible and traditional workspaces in a tenant’s lease. The expansion of flexible workspaces throughout Hong Kong make them highly accessible to occupiers in the city and present a win-win solution for companies looking for flexibility and cost savings.

Leadership is essential for workplace transformation to be successful!

Many Hong Kong offices rely on using traditional office layouts, yet, strategies such as ABW are designed to enhance staff productivity, experience and engagement by offering a variety of choice working environments – which in today’s world, is becoming essential to attract and retain talent.

In our survey, 36% of respondents chose ABW as the most desirable future workplace. However, due to the hierarchical and conservative nature of some companies, the highly regulatory environments of some industries, the need for front-line employees to have individualised desks and a reliance on paper-based operations, open plan or activity-based working styles are not common.

Still, if companies are moving towards adopting ABW, they require the commitment from top management. They need to engage their staff before and during the transformation process, as well as be firm believers regarding the benefits it’ll bring concerning the change in culture, staff behaviours, digital capabilities, work flexibility, among other factors.

Enhancing the employee experience through a digital workplace

Based on our responses, some companies in Hong Kong lack the awareness and knowledge of how technology can enhance the employee experience. Companies are willing to invest in technologies already available to MNCs and large companies, such as intranet, HR online processes, and virtual meeting rooms to improve business operations. However, there’s limited interest in deploying new software and digital platforms that encourage staff engagement, collaboration and communication – tools that improve an employee’s experience and productivity.

Wellness in the workplace

Wellness encourages staff to live healthier better lives, even when they are in the workplace. Currently the top wellness priorities for companies include good air quality and access to natural light. A better ventilation system and excellent air quality can improve cognitive performance, reduce the incidence of health problems and increase employee satisfaction. Exposure to daylight can improve staff’s circadian rhythm, activity patterns and quality of life.

Whist on-site fitness and physical wellbeing are currently not priorities, market sentiment indicates that movement within the office space, through better ergonomics and flexible working arrangements, will be of greater importance.

A few recommendations...

Occupiers and landlords in Hong Kong are usually at the forefront of what’s happening in the market. However, we believe there is always some room for improvement! So here are a few recommendations...

We would like to encourage companies to explore the benefits of devoting resources towards new technologies to create a smart working environment – a workplace that is highly functional, responsive and adaptable to company workflows. On that note, we would also prompt companies to review their current workplace strategies – if any, and create a plan that focuses on offering greater flexibility to their employees with the full support of management and top leadership. If you’d like help with this, you can always contact our Workplace Strategist, Truddy Cheung at truddy.cheung@colliers.com.

Wellness should also be integral to any real estate strategy. Buildings and spaces with high wellness standards and certifications are more desirable as companies focus on wellness as a driver of employee engagement, happiness and productivity. Comprehensive wellness programmes that include initiatives such as increased greenery, more activity, and improved nourishment and sustainability can attract great new talent who expect health and wellness to be an integral part of the way they work. If you would like to know more about wellness strategies, contact our Head of Wellness, Victoria Gilbert at victoria.gilbert@colliers.com.

For more information on our Hong Kong Occupier Survey 2018 results or an in-depth view of what trends and challenges occupiers are currently facing, please contact our Head of Office Services, Fiona Ngan at fiona.ngan@colliers.com.

For a full version of the Hong Kong Annual Occupier Survey Report 2018 click here.