Business leaders are currently dealing with the crucial question – how can they effectively optimise resources, maximise savings and drive growth as they navigate a dynamic business landscape in 2024. Their challenges remain compounded by unprecedented inflation, fierce competition for talent, and the rising pressures of digitalisation and climate action.

Amid this scenario, offices today, albeit with much higher workforce flexibility, remain the epicentre of the work culture, with relocation decisions being underpinned by talent strategy and ESG goals. In Asia Pacific, a much greater pull to the office is creating higher occupancy than witnessed in other markets globally – causing continued upward pressure on office rentals across the region.

Colliers’ Expert Insights | Asia Pacific Office Markets highlights six priorities to achieve cost savings in office real estate and presents Q1 2024 Office Market Research Reports from key Asia Pacific markets, unearthing actionable insights for real estate leaders.

Six priorities for cost savings in Office Real Estate

1. Align office strategy with business goals

Linking the office strategy to an organisation’s unique business goals is the first step to identifying strategic opportunities for cost reduction. Decisions around owning versus leasing should be aligned to location objectives and expected length of requirement for each office. Taking support from large landlords and analysing their debt positions and credit ratings could help businesses gain insights into potential negotiation leverage.

2. Portfolio Strategy

Consolidation opportunities, including reimagining office campuses or adopting hubs, could be a game changer to unlock cost efficiencies. Monetising non-core assets, along with right-sizing and repurposing offices to match new ways of working, is key to thriving in today’s dynamic environment. For instance, in hybrid work models, analysing occupancy and optimising space utilisation, as well as taking advantage of long-term labor-cost arbitrage opportunities and government incentives, are at the core of reducing real estate costs. Another option is to relocate to markets that offer a competitive edge with talent availability and affordability, while also being compliant with ESG requirements.

3. Maximise lease negotiation leverage

When putting together an office strategy, being able to capitalise on favorable conditions by understanding market cycles and timing is key. Save on rent arbitrage by identifying areas of above market rent or by relocating to a lower cost market. Dispose of excess space by subleasing or exercising termination or contraction options. Consider shorter-term and coworking options to minimise up-front costs. Renegotiate leases and contracts. These options will not only allow businesses to cut back on costs significantly, but also offer much sought-after flexibility to keep up with evolving business needs.

4. Data-driven space utilisation

By leveraging technology to automate routine tasks, track space utilisation, and enhance operational efficiency, you can achieve cost savings and improve the overall performance of your corporate office real estate.

Using occupancy sensors and space management software allows for efficient tracking of space utilisation metrics such as occupancy rates, desk utilisation and meeting room usage.

Embrace technology solutions and automation tools to streamline office operations, improve efficiency and reduce administrative overheads.

Invest in smart building technologies, digital workplace platforms and facility management software to optimise facility management, space planning, maintenance and tenant services.

5. Prioritise Energy efficient systems & upgrade

Leverage energy-efficient lighting, HVAC systems and building automation systems to reduce utility costs while improving the overall environmental impact of your office space. By prioritising sustainability initiatives and green building practices, you can achieve long-term cost savings while enhancing the environmental performance of your office buildings.

6. Drive employee engagement and satisfaction

Ensure a positive work environment to drive employee engagement, satisfaction and productivity. Happy and engaged employees are more likely to utilise office space efficiently and contribute to cost-saving initiatives.

Whilst cost concerns have started to filter faster through the decision-making process, our research this year shows that occupiers across industries in the region are still willing to pay higher rentals for better quality offices and amenity-rich locations to drive talent acquisition. However, their space requirements may have reduced and therefore mitigating the overall cost impact.

The good news is, Asia Pacific is benefitting from more cost-conscious occupiers on a global scale with greater uptake from Global Capability Centres (GCCs), particularly for markets such as India, where GCCs are expected to contribute over 40% of the total office leasing in the next 1-2 years. The region remains a dominant source and destination for global capital across asset classes, including Offices.

Read the full report here.

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