The future is looking bright

04 Nov 2021

By Andrew Stringer

While parts of New Zealand are currently back in lockdown due to Covid-19’s Delta variant making its way to our shores, for much of the last 12-18 months we’ve been in an enviable position of starting to explore what the future of work looks like. Unlike other countries who are just starting to emerge from longer lockdowns and periods away from the office, we’ve had the opportunity to return to our workplaces and to begin reimagining how they might look in the future.

CBRE Asia Pacific’s latest report on the Future of Work focuses on the office occupier sentiment on the future of their office portfolio and workplace across the region.

In the final part of our Future of Work series, we focus on the theme of business sentiment and growth, rounding out the other three themes, workplace change, adoption of hybrid working and portfolio strategies. We paired this with real life views from interviews conducted in the first half of 2021 where large corporate occupiers shared their view of lessons learned from Covid-19 over the last 18 months and the future impact this will have on their workplace and future strategy.

The future is looking bright

Notwithstanding the obvious risks in some sectors resulting from the current lockdown in Auckland, business conditions improved markedly through the first three quarters of 2021. Although undertaken before the current lockdowns, a recent CBRE occupier survey indicated positive sentiment among Australia and New Zealand respondents increasing threefold, from just 28% last October to 85% in May. Anecdotally, while there are clearly near-term issues to resolve, the marked difference from 2020 is that occupiers are viewing the current disruption as temporary rather structural.

Proportion of occupiers reporting recovering/expanding business conditions


Source: CBRE

This view is supported by mainstream economists who suggest that while the economy will take a sizeable quarterly hit, the rebound, just like last year, will be even stronger, with the stellar performance of the first half of the year returning soon after we move back restriction levels.

Across Asia Pacific there’s a positive outlook evident when assessing businesses’ expectations in relation to the future size of their real estate portfolio. Though Australia and New Zealand participants’ appetite may be smaller in comparison to their Asian counterparts when it comes to expansion plans, the latest survey results show a clear improvement since last year when no participant indicated plans to expand.

When discussing this observation with our New Zealand occupier and investor audiences, their responses underpinned this positive sentiment. There may be some caution from occupiers when committing to additional space, but landlords are seeing unsatisfied demand especially around flight to quality to spaces that offer flexibility, and workspaces that are lagging are now quickly adapting to meet the needs of occupiers.

Pleasingly, 47% of Australia and New Zealand participants expect an increase in total size of their portfolio to meet improving business conditions and we expect a proportion of this growth could be accommodated through increased use of third-party suppliers and satellite offices.

Expected real estate portfolio size change over the next three years


Source: CBRE

But it’s also apparent occupiers are focused not just on the size of their portfolio but how the activities within it are likely to change through hybrid working and a greater focus on high value, face-to-face activities, recognising the future office needs to be a compelling destination. 

Managing this change will need to be a priority and at CBRE we understand this all too well as we excitedly await relocating to our new home next year. Prioritising multi-functional spaces, collaborative environments and a variety of focused work styles – all digitally enabled – was what our people wanted, and what we look forward to sharing with our clients in January 2022.