How hybrid work trends are shaping inflection point for real estate

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Following the pandemic, workers are putting their faith in flexible working. In the last month, results from a poll carried out by the Randstad Singapore, the human resources (HR) service provider Randstad Singapore highlighted that over 40% of Singapore employees will not accept an offer if they were not able to work at home or if the job doesn’t allow flexible working hours.
The shift in the employee attitudes is a sign that hybrid work is on the rise — which is causing more organizations to reconsider their office space. “The next three years are going to become an inflection moment for real estate, because the changes brought on by the pandemic provide an opportunity to take a step back, consider a long-term real estate strategies and how it will align with the business goals of the future,” notes Anthony Couse CEO of Asia Pacific, at JLL.

JLL’s Future of Work Survey 2022 conducted a survey of CRE executives in corporate settings, (CRE) executives across the globe and discovered it that 56% of Asia Pacific (Apac) respondents declared that they would allow remote work to everyone in 2025. At a briefing for media on August 18, Couse emphasizes the many options in the field of hybrid working arrangements, based on many factors like the size of the company, its business industry, work culture as well as the country of operations and many more. “Everybody is different in how they interpret hybrid,” he says.

However, it is evident that organizations must change their workplaces to accommodate flexible working patterns that Couse states is now an essential instrument in the battle for talent, and also as an element of diversity equity, equity and inclusion strategies. The importance of the office Although hybrid workplaces are essential but they do have limits. A survey conducted in March 2022 by JLL with Apac HR decision-makers showed that the 67% of the managers who were surveyed found it harder to manage a workforce that is hybrid.

The most important issue is advancement in the workplace, particularly for those who are just starting out or new to their professions. “Sixty percent of HR executives consider the office to be the best place to grow your career as well as to gain knowledge. It’s not possible to do this outside of the office,” Couse explains. Another aspect is organisational culture, which is difficult to establish without employees having meetings in person at the workplace.

The survey also discovered how hybrid jobs are pushing businesses to discover new ways to facilitate collaboration through the application of technology as well by providing areas that encourage teams.

To this end, Couse emphasises that the office is still an integral part of organizations. “Seventy-seven percent of CRE experts agree that offices will continue to be essential to the company’s overall system,” he says.

Contrary to reports that organizations are cutting down on office space due to the shift towards flexible work arrangements Couse asserts that leasing data from Apac indicates a consistent need for offices. Despite the challenging macroeconomic climate, Apac recorded a net absorption of office space of four million square meters (43 million square feet) in 2021, which is similar to the 10 year running average for Apac. “It’s clear evidence that the office remains extremely, extremely relevant since there is a greater demand for spaces,” he says.

Alongside this need organizations are also looking into redesigning their workplaces to reflect the changing conditions of a post-pandemic world. In its poll on Apac HR leaders, JLL discovered the following: 56% of respondents intend to redesign or revamp the workplace within the next twelve months in order to create a workplace that is envisioned as a place for meeting face-to-face, collaboration and encouraging the spirit of creativity and innovation.

Moving to green buildings

Another factor that is driving the change in workplaces is the increasing demand for environmental socio-economic and management (ESG) as well as sustainability. Nations that are developed around the globe like Japan, Canada and the US have set goals to achieve zero carbon emissions in 2050. In Singapore The National Climate Change Secretariat announced on Sept . 5 that they were also considering an 2050 net zero goalpost. In the meantime, private-sector companies around all over the world are beginning to draw the plans to achieve net zero carbon emissions.

Kamya Miglani from JLL’s head for ESG analysis, Asia Pacific, highlights that decarbonizing building environments is an essential element to reaching net zero carbon goals. In the JLL’s decarbonizing cities and Real Estate report released in May, she points out the fact that a study of 32 cities across the globe discovered that the built environment accounts for about 60% of the overall emissions. In Singapore with its greater proportion of modern buildings that are built, the built environment accounts for 40% from carbon emission.

Due to the importance to the built ecosystem to the quest to achieve net zero corporations are trying to find ways to create green real estate portfolios and that includes occupying green certified buildings, according to Miglani. JLL’s Future of Work survey found that 7 out of 10 businesses located in Apac would be willing to fork out a cost to lease buildings with green certifications.

The demand for green buildings is much greater than the amount available particularly in cities with established infrastructure in which about the 80% of the buildings that will be present in 2050 was already built. This is why Miglani says the fact that retrofitting buildings of the past is crucial to achieving an adequate supply in green-certified buildings. To reach net zero targets in 2050, the present rate of retrofitting buildings should be greater than 3% annually, which is higher then the rate currently at 1% up to%.

Another green approach Miglani is convinced will be popular is green leases. They are lease agreements between tenants and landlords with clauses that lay out the environmental standards for what the building’s future plans are to be managed or used in a sustainable way. A majority of% of the CRE pros interviewed with JLL in Apac believe that green leases are “a game changer to ensure that real estate is future-proof” with 30% of them% already having signed an agreement to renew a green lease.

However, Miglani says that green leases need the appropriate tools and infrastructure to collect data that will accurately determine whether sustainability requirements are being fulfilled. “Again this is why retrofitting buildings enters it,” she says. In the end, Miglani argues the fact that businesses that adopt sustainable real estate practices are in the process of securing their business. “A green office does not only aid in [net zero carbon goals] and meet the requirements of employees in a constantly changing multi-faceted, hybrid setting,” she says.