Activity based working is here to stay

Activity based working is here to stay
Activity based working is here to stay

GUEST OBSERVATION

With businesses and government organisations seeking improved efficiencies, better technologies and more staff mobility, business leaders are recognising that activity based working (ABW) can have a large and positive impact on both cost efficiencies and improved productivity. Currently, approximately 50,000 employees in Australia work in various forms of ABW, including large corporate organisations like JLL, NAB, ANZ, CBA, Macquarie Bank, Microsoft, Cisco and Suncorp. As large leases expire over the next decade and businesses look to move or renew, ABW will be front of mind and new space take-up is likely to be moderated by 15 to 20%.

ABW is a workplace strategy aimed at providing people with the flexibility to undertake workplace activities in a variety of settings that best suit those tasks. It is designed to foster optimum productivity and streamline the workplace for cost and environmental efficiencies. There are various forms of it, and it’s likely that take-up will remain different for companies based on their needs.

ABW is currently still in its infancy, with the proportion of office tenants already committed to an ABW format still very low. Sydney has seen more tenants embrace the concept than other Australian markets, but this still only translates to a small portion of total CBD stock. 

Many industry participants have enthusiastically embraced the concept and believe its importance and impact on the market will only grow over time. However there also remains some scepticism. As much as non-believers recognise elements of ABW will have a lasting impact on the market, they do not believe the concept will survive long term. Instead, they think it will morph into something else as market conditions change.

From a tenant perspective, the evidence suggests that ABW and space utilisation is currently high on the corporate real estate agenda. According to Jones Lang LaSalle’s recent biennial corporate survey Corporate Real Estate at a Cross roads: Cost vs Value, occupiers surveyed both in Australia and globally point to an increased focus on ABW. Of the 52 respondents surveyed, 76% stated they expected an increased focus on utilisation and density over the next three years.

In Australia, Sydney’s CBD is likely to be the most exposed market nationally to the trend, which reflects the prevalence of finance and insurance tenants in the market and of larger tenants more generally. Survey responses suggested that ultimately between 20 and 25% of Sydney CBD tenants would adopt ABW.

Some survey respondents felt that there was a high risk associated with ABW being implemented purely for cost savings. As such, ABW may be unsuccessful and unpopular if implemented without appropriate change management plans, IT investment or provision of enough common space.

Research shows employees who work in ABW environments feel positive about the new way of working. A separate survey conducted by JLL following our adoption of ABW showed 87% of staff believed (strongly agreed or agreed) the new ABW office design provides an attractive environment to work in and contributes to their productivity.

Regardless of the size of the eventual impact of ABW on the property market, the rate of impact will be relatively slow over a period of 10 to 15 years. As such, this slow steady impact will be relative indiscernible from other market factors over the next decade. While ABW can theoretically be undertaken in older existing buildings, the concept is more compatible with some of the benefits new modern office stock offers. 

Rajiv Nagrath is director of corporate solutions with JLL.

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