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As 2023 draws to a close, the Australian office sector continues to navigate the challenges of a post-pandemic world.
With the return to the office appearing to stall, the everyday use of the workplace has become a hot topic of global debate. It’s clear that the industry must now offer more choices and radically shift its options to cater to the evolving needs of a hybrid workforce – a change that many companies are still grappling with in this new world of work.
Based on the latest data and insights from workspace advisory firm The Instant Group, several key trends have emerged in 2023 that are set to shape the next evolution of workspace.
Here’s what office occupiers, landlords and workspace operators can expect to extend into 2024:
1) Expanding work location options
The current hybrid work model presents a binary choice: working from home or at a single office location. However, the market for alternative working environments is beginning to flourish.
A survey by The Instant Group involving over 200 office occupiers revealed a staff preference for splitting time between various spaces: In an ideal scenario, workers reported they would like to spend 42 per cent of time in the company office, 31 per cent in co-working spaces, 23 per cent at home, and 4 per cent in third spaces like cafes or public settings.
This 35 per cent of “other” spaces is anticipated to grow in popularity, as workers seek out environments that enhance their workday experience. With enterprise companies starting to cover the costs, this segment of the market is expected to expand significantly, offering a wider range of services.
2) Addressing the downsides of working from home
While working from home can offer a stress-free lifestyle and improved work/life balance, it’s not without its drawbacks. Issues such as isolation, technical problems and communication hurdles have been highlighted by professionals.
To address these challenges, employers are recognising the importance of providing access to flexible workspaces that support a successful remote work environment.
3) Catering to generational needs in workplace design
The workplace now hosts an unprecedented five generations, each with distinct views on office environments. Research from The Instant Group shows that older workers are more inclined to spend part of the week in an office compared to their younger counterparts.
Employers must offer a variety of workplace locations and design options to appeal to all demographics. Future workspace design will likely place greater emphasis on behavioural science and usage patterns to create dynamic spaces that can adapt between focus and collaboration.
4) Flexible office supply to hit new milestones
After several years of moderate growth, the flexible office supply is poised to surpass 1 billion square feet in 2024, driven by consolidation and high interest from asset owners.
Operators are preparing for portfolio expansion in response to rising demand and new partnership opportunities. By 2030, it’s predicted that 20–30 per cent of all office space will be flexible.
Cities such as Mexico City, Sydney and Dubai have seen significant demand growth, while traditional markets like London and New York City have experienced slight declines. The industry is expected to witness more mergers and acquisitions as operators strive to capture market share and improve margins.
5) Decarbonisation as a catalyst for flexible workspace demand
The push for decarbonisation is becoming a driving force in the demand for flexible workspaces. Research by Instant and Incendium Consulting in 2022 showed that traditional leased office spaces generate 158 per cent more emissions per occupier than flexible spaces.
With tools like the Sustainability Index enabling tracking and reporting of sustainability initiatives, the office sector is moving towards greater transparency and environmental efficiency. Operators will need to showcase their sustainability protocols to attract occupiers aligned with environmental targets.
As we look ahead to 2024, it’s evident that the Australian office sector is at a pivotal juncture. The trends of hybrid work, generational diversity and sustainability are not just passing phases but are reshaping the landscape of workspaces. To stay ahead, stakeholders across the industry must adapt and innovate, ensuring they meet the changing demands of a workforce that values flexibility, connectivity and environmental responsibility.
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