While location, size and cost are the obvious factors to consider, occupiers should also assess how their business or respective industries are going to change over the next five to eight years.
Ms. Jenny Ling, Director of Office Services at Colliers International, says, “Having a good understanding of potential market shifts or challenges ahead will enable the firm to select an office space that is not only relevant to the current climate of its business, but also adaptable to future changes. It is about striking the right balance between affordability, functionality and flexibility.”
There are many variables that come into play in the selection of an office space. However, these are five crucial ones that occupiers should take note of when they are sourcing for a new commercial space.
As they say, location is paramount in real estate. However, it must still serve the needs of staff and visitors. Some questions ought to be asked in the assessment of each location:
- Is the place easily accessible by staff? Where is the concentration of the employees’ residences?
- Will guests and clients have problems getting there?
- Does the business need to be near its suppliers and other partners?
- How important is it to be near any major transport hub e.g. the airport?
- Is the location on-brand?
- Are there competitors in the same building?
- What are the benefits of being in the central business district versus regional centres?
Ideally, the chosen location should also be near to a sufficient range of amenities, including food and beverage outlets, a gym, a pharmacy, or a convenience store. Having entertainment options in the neighbourhood - such as a bistro where staff can unwind after work hours –could be something that will keep employees happy too.
Typically, it is recommended to have at least 80 – 100 square foot of space per employee as a general rule. However, different businesses will have different needs. In addition, the rise of coworking and activity-based work as well as the push for more efficient space utilisation have also redefined the ways companies use or configure the office space.
In determining what the appropriate size of the new office should be, occupiers need to consider these factors:
- How much space should be dedicated to meeting rooms and the office lobby?
- Are there sufficient social and recreational space for staff e.g. pantry, games room or a rest area?
- Will I have room to accommodate future business expansion?
- What is the company’s flexible work policy and what proportion of staff frequently work off-site?
- Is the office too cramped (which will impact staff morale and productivity)?
The cost of the office space is a function of both location and size. Obviously, a prime spot in the CBD would be pricier than one in the suburbs, as would a larger space over multiple floors against a smaller floor plate. Again, there are many variables that could influence the price/rent:
- What is the current market cycle: is it a tenants’ or landlords’ market?
- Are there any hidden costs? e.g Air-conditioning charges self-borne or provided by landlord?
- Is the landlord offering any incentives e.g. rent-free period?
- Can the business operate in an older (and cheaper) building rather than a brand new one?
It is advisable to work with an experienced property consultant who is familiar with market trends and recent transactions in the vicinity so as to ensure you are getting a fair deal.
These days, occupiers need much more than just a reliable internet connection and landlords know it. In keeping with the times, many older buildings are being refurbished to stay competitive. Meanwhile, new-builds will likely have all the bells and whistles which could appeal to businesses that require high-specifications and smart technologies.
Increasingly, more companies are also focusing on corporate wellness – in a bid to improve the wellbeing and health of their employees. In such instances, they will likely be drawn to a development that puts wellness at its core, offering features such as: high quality air monitoring systems; ample natural lighting; lush greenery; use of sustainable materials; fitness areas; innovative public spaces; and end-of-trip facilities (such as locker room, shower facilities and bicycle storage areas) amongst others.
Beyond the aesthetics of the building, occupiers should think about these as well:
- Is the building Green-mark certified, which may align with the firm’s corporate values?
- Is the development sufficiently tech-enabled to allow the business to tap digital solutions now and in the future?
- Are there ample wellness features for staff?
- How is the building’s security system?
- Are there enough lifts to serve the occupants of the entire building? Does the building’s lifts run on smart lift assignment system?
- Does the building have an irregular shape which may not be efficient?
In a dynamic and ever-changing business environment, companies need to remain nimble. That is often easier said than done, particularly in real estate where leases are signed for several years at a stretch.
To enable occupiers to be more flexible, Colliers has mooted the Flex and Core strategy which combines traditional office leases for core business functions with flexible space memberships for the more variable components. This will allow the firm to dial up or down its headcount in tandem with its performance without running out of space in times of growth or having too much space when the business contracts.
In this aspect, some considerations include:
- Which segments of the business can be located in a flexible workspace?
- Does the office development have an existing flexible workspace operator?
- Will there be available space for expansion within the building, if needed?
Do choose an office space wisely as the business and its employees will have to live with the decision for the life of the lease.