Office Space

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2020 was set to present an opportunity for investors to capitalise on lucrative growth potential in the Australian middle markets office space, according to Colliers International. 
Colliers’ Office Middle Markets Transaction Review for 2019, found that current investment opportunities available in the $10 million - $100 million range which comprises the Middle Markets Office space, offers investors a competitive yield in the current rental landscape and strong value-growth potential. 
There were 154 transactions in the middle market’s office space in 2019, totalling $4.7 billion. Despite metro markets recording significantly more transactions (103 Transactions, totalling 67% of assets, compared to 51 CBD assets; 33%), CBD Assets were the star performers with an average yield of 4.89% and average capital value of $7,904 per square metres. 
By contrast, Metro assets recorded a 6.23% yield and capital value of $5,638 per square metres. 
According to Colliers's analysis, the 2019 track record suggests that middle markets will offer large institutional clients including REITs, Syndicates, Unlisted and Wholesale fund purchases, as well as private investors, the opportunity to invest and capitalise on this currently untapped sector of the office market. 
“Transactions from 2019 indicate that the tightening yields in the office sector have not yet affected the Middle Markets space, when compared to office assets valued at over $100 million,” said Matt Meynell, Head of Investment Services at Colliers International.  
“This is being seen across all Australian capital cities in both the CBD and fringe/metro office markets; however, the geographic trend becomes most obvious when comparing the tight CBD office market to the Metro Markets nationally.” 
The active purchasers in the Office Middle Markets space throughout 2019 include Charter Hall, and Centuria with four acquisitions, ESR with three and Collective Capital, Australian Unity Property Income Fund acquiring two assets each throughout 2019.  
These acquisitions totalled $675m in transaction value and achieving an average yield of 6.42%. 
 
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Office market shows signs of growth-potential in 2020; Colliers International

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The increasing migration of flexible office space to areas outside of major metropolitan cities globally is creating a ‘flex economy’ that could contribute more than $11.5 billion AUD to local Australian economies, according to a first of its kind Regus study.
They found an individual business centre in Australia would create 222 permanent jobs at a national level (ranking seventh highest out of the 19 countries analysed) and 122 net local jobs.
In Australia, an average business centre will generate $31.21 million AUD in GVA per annum, with $16.87 million AUD going into local economies.
Time saved by employees avoiding the commute would be 8,105 hours per hour, this equates to roughly 337 days or 48 weeks.
By 2029, this means over 80,000 jobs created within business centres across the nation, providing net additional employment opportunities for local residents amounting to over 44,000 jobs, alongside $11.5 billion AUD of annual value, of which $5.99 billion AUD would be retained by local economies.
Steve Lucas of Development Economics, and report author, said “this study reveals a shift in jobs and capital-growth moving outside of city centres, where it has been focused for the last few decades, into suburban locations."
"This can benefit businesses and people, from improving productivity and innovation, to reducing commuting time, which leads to improved health and wellbeing” he said.
Read the <a href="https://www.regus.com/suburban-economic-survey" target="_blank">full report here</a>.
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Flexible workspaces to contribute $11.5 billion to local Australian economies: Regus

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SPONSORED POST
Designing a workplace that meets the needs of a diverse workforce is a challenge. What appeals to Millennials may not appeal to Baby Boomers when it comes to a functional work environment. In the 80s we saw the rise of the ‘cubicle farm’, which slowly but surely has faded out to the now open plan layouts that we see in offices. However, to accommodate for different working styles, whether they are generational needs or personal preferences, companies need to provide alternative working areas within an office that go beyond the employee’s desk. The overall design of an office has a major impact on employee productivity and wellbeing, so how do we take all of these factors into account when fitting out an office space?
The Layout
Different generations have different needs when it comes to effective working environments, so how can we design work spaces that cater to such a widespread demographic? In recent years we have seen a shift towards open plan offices, with 70 percent of companies opting for this type of layout. However, according to research conducted in 2019 by Savills titled ‘What Workers Want’, 30% of employees find that this type of layout has a negative impact on their productivity.
Buildings, a journal published by MDPI, found that perceived productivity in open-plan offices was impacted by seven factors including: amount of interruption, noise levels, work area aesthetics, furnishing, cleanliness, ability to adapt the work area, and personal control over lighting levels.  
These are factors that Associate Director of Project Management at Savills, Simon Gazeley, takes into consideration when working with a client to fit out an office space. “Starting by surveying your staff to understand what works and what can be improved upon, plus setting up focus groups to steer the design is highly beneficial to the process. By understanding your peak occupancy ratio, you can release space for alternative settings rather than empty workstations,” Mr Gazeley commented.
For different industries, different layouts will benefit the employees and their overall productivity. For those working in offices where employees are constantly taking phone calls, one-person quiet rooms are beneficial to minimise the distraction to others. Whereas for creative industries where staff are frequently collaborating, less formal, flexible spaces are more appropriate for productivity, rather than staff brainstorming around a boardroom table. “Optimise the building’s attributes by creating focus areas in the darker and quieter spaces, with a variety of furniture settings from high tables, booths, lounge chairs, acoustic screens and the like,” Mr Gazeley said. 
For Millennials in particular, restrictive work environments are perceived by many to hinder their ability to work effectively, so common-use spaces are a real asset when it comes to optimising productivity. “Providing a variety of work settings for different tasks, whilst being cognisant of ensuring equitable access where the office is not fully agile is key to limiting disruption to others, whilst boosting productivity,” Mr Gazeley said. 
Key findings from the ‘What Workers Want’ study by Savills indicated that within the workplace, employees place the greatest value on having the option to work in a variety of spaces, and being provided with quality IT infrastructure. The same study revealed that above all other factors, 37% of employees were dissatisfied with the provision of quiet spaces within their workplace. 
The Technology 
New trends and updates to technology occur frequently – what once seemed like a novelty has become an integral part of daily life, and more so a part of working life. With a heavy reliance on technology, it makes sense to incorporate technology into the design of an office space. However Mr Gazeley points out that with all technology implemented, it should be planned for change and upgrade as it quickly becomes superseded and improved. 
The relationship between technology and architecture has been dubbed ‘Techiture’, with technology embedded in inanimate objects. By digitising buildings, we are able to gather data on the trends of the people who inhabit them. An article by the Kinnarps Trend Report points out that this enables architects to see how employees use the different spaces in their offices. “This is a game changer for the design and construction industry when it comes to designing workplaces that are tailored to the staff, and upgrading or reconfiguring spaces that are not well utilised,” Mr Gazeley said. 
The Wellness Factor
With the average person spending one third of their life at work, we are seeing employers placing greater value on overall employee wellness. While most employers offer their staff discounted health or mental health benefits, research shows that the physical working environment has the biggest impact on overall wellness. With many considerations to take into account, the WELL Building Standard has been established to ensure employee wellbeing is met. Seven factors are taken into account including air, water, nourishment, light, fitness, comfort, and mind. 
Studies have shown that simple factors such as adequate lighting positively impacts employee mood and productivity. According to research conducted by global management software company, Ceridian, dimly lit areas have a negative impact on the brain, with employees who work in poorly lit spaces more likely to suffer from poor moods. “In developing buildings and designing fit-outs, access to daylight or views such as atriums are highly desirable. Built zones tend to be located in NLA farthest from the perimeter, whilst circadian rhythm lighting is currently cost prohibitive in many workplaces, good human centred lighting design should always be adhered to,” Mr Gazeley said. 
The Australian HR Institute says poor air quality reduces cognitive ability and leads to employees feeling fatigued and even suffering from headaches. Air quality can be easily improved by having greenery in the workplace, plus plants also help to absorb noise pollution.  We are seeing nature brought indoors with the trend of vertical gardens and greenery walls taking off, with Gazeley agreeing that Landscape Architects are becoming a key consultant in many large workplace design teams. 
An alternative way to bring the outdoors in is by using natural textures and materials, which is also shown to have a positive impact on wellbeing. Using different types of timbers and incorporating natural lighting is said to make the indoor environment have a calming effect on people. Research is indicating that highly productive workplace design predominately embraces organic shapes intended to bring spaces together without visual barriers. 
Working ergonomics seamlessly into the design of an office space is important not just for aesthetic reasons, but because being seated for prolonged periods of time has a negative impact on a person’s health. The comfort factor of the WELL Building Standard considers different working areas, and places value on ergonomics. “While sit-to-stand workstations may not last the test of time, as workspaces become more agile they represent current best practice when combined with other initiatives to ensure an active workforce. As the cost premium is reducing, we are seeing the ratio increase in current fit-outs,” Mr Gazeley said. 2019 Research by Savills indicates that 6% of employees prefer to work at a standing desk. 
Companies are starting to introduce designated recharging or wellness spaces into their offices, with Google and the Huffington Post going as far as providing high tech sleep pods. With employees clocking up an estimated 90,000 hours at work in their lifetime, providing a space where they can recharge for 20 minutes will be a benefit to how employees utilise their time overall. A wellness area should be a separate space to a staff breakout or kitchen area, where employees can de-stress, switch off their phone, or even meditate. “Even small part floor workplaces can assign a small private quiet room for multiple uses, with the contents of these rooms or spaces being quite modest,” Mr Gazeley said. 
In Conclusion 
Having the correct balance of office layout mixed with technology, plus incorporating the factors that contribute to overall employee wellness helps to accommodate for the multi-generational workplace of today. Taking these combined elements into account helps to maximise the potential work spaces within an office, and in turn boosts overall employee productivity. Considering generational needs and differed working styles will lead us to being able to design workplaces of the future with maximum functionality. 
Savills is a leading global real estate service provider offering the full spectrum of services from strategic advice to managing assets and projects and transacting deals. Simon Gazeley is an Associate Director within the Savills Project Management team. To learn more about Savills, visit <a href="http://www.savills.com.au/">savills.com.au</a>.
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Workplace fit-out fundamentals that accommodate our multi-generational workforce: Savills

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An opportunity has arisen to lease office space in the Surry Hills commercial block designed by the late Harry Seidler.
It's been called home by the Australia Council for the Arts since it was completed by Seidler in 1999.
They're exiting the 4,435 square metre space which is available at the end of September. 
Seidler designed the building in 1996 and his development firm spent three years creating the six storey building that was modelled on his own offices in Milsons Point.
Those offices won the prestigious Sir John Sulman Medal.
Each floor of the Elizabeth Street block features column free space and is encased by frameless floor to ceiling glass windows.
There are large north facing terraces on levels three and six and west facing terraces on levels three and five.
The Seidler family still own the building.
Knight Frank's Nick Lau is marketing the commercial space.
There's likely to be more rental opportunities given the demise in Australia of low-commission real estate agency Purplebricks who occupy space on level one.
 
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Space opens in Harry Seidler designed office block in Surry Hills 

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Close to one million square meters of office space will be added to the Australian CBD market over the next three years with half of this new space to be supplied to the Melbourne market, growing it by more than 10 per cent of its current stock. 
With this in mind, along with ​recent reports​ indicating that office vacancy in Australia is falling, there are many reasons to refurbish a building, even more so in urban areas where the usage, aesthetics and sustainability of a commercial asset need to be upgraded to remain competitive. 
During this process, it is important for architects and building owners to focus on what to look for in a space before refurbishing, but this first begins with considering whether a building is ready for refurbishment or not. 
Commercial interiors have a typical lifecycle of five to ten years. Post this timeframe, interiors will start to show wear and tear and become outdated, ultimately reducing the value of the commercial asset. 
Further to this, tenants may choose to opt out of their current lease due to the deteriorating condition of the building and the lack of services and features available, which results in loss of income for the building owner. 
Although there is an upfront cost associated with refurbishing, this is typically balanced out by the stronger yields, tenant retention and higher occupancy levels such upgrades can provide. 
End-of-trip facilities are an example of an interior that experiences wear-and-tear but can be commonly overlooked. These facilities are used daily by tenants who use alternative ways to travel to work and generally comprise of showers, lockers, changing facilities and bike racks. 
When these functional facilities are not up to an appropriate standard, tenants are less likely to feel satisfied with the building as a whole, and will be less likely to re-consider signing on for another year. 
This can also play into a buildings WELL rating, that is, a leading global rating system that has become the leading tool for advancing health and well-being in buildings on a global scale. 
Buildings are assessed by measuring, certifying, and monitoring features of the built environment that impact human health and wellbeing through air, water, nourishment, light, fitness, comfort, and mind - with environmentally friendly choices likely to boost your overall rating. 
If you have appointed a design firm to refresh your building, a typical oversight is choosing to replace, rather than refurbish. Some may view this as a cost saving method, when in fact, this can cost more over the long term with existing services 
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such as partitions, floor finishes like stone or marble, and ceilings, simply retired to landfill, which can in turn negatively impact your WELL rating. 
By reusing existing resources, building owners can expect to pay less over time as the life of these resources are extended, as opposed to constantly being replaced each lifecycle. 
When it comes to taking steps to overcome waste, architects and building owners should always consider input from current tenants and use this information to guide the process. 
Tenant consultations are an effective way to source information about the current state of the building. This information includes what could be improved and what services and features are currently lacking, which can lead to further research into what assets of a similar class are doing to upgrade and retain tenants. This open communication channel with tenants is also likely to improve the overall tenant-owner relationship. 
It should also be common practice for building owners to review their investment strategy and market conditions to better understand their financial position on outlaying costs. Having a clear understanding of this will give them more assurance about how much to outlay to maximise yield in accordance with their investment strategy.
DYAN SISOUW is the Director of EnviroScope Maintenance delivering commercial maintenance solutions. 
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What architects and building owners should be looking for during the refurbishment process: Dyan Sisouw

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Macquarie Park is set to get its first CBD-quality office building with the launch of John Holland’s Macquarie Square development.
The development precinct will launch a new standard for Macquarie Park, creating 117,071 sqm of office space across five buildings, with a new 7,000 sqm public park at its heart. 
Designed to blend work, lifestyle and recreational activities, the development will also feature retail, premium dining, bars, event spaces, a gym and activated public spaces.
John Holland CEO Joe Barr said the launch of Macquarie Square marked a milestone in the company’s history as an integrated property and infrastructure leader.
“We are the owner, developer and builder of this iconic new precinct, and we are excited to show off this modern marketplace for Sydney,” Mr Barr.
“Thanks to the delivery of another John Holland project, Sydney Metro Northwest, Macquarie Park is more accessible than ever before.”
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/6/25/WaterlooRd_View1_REV-B-Less%20logos.jpg" alt="">
Executive General Manager Development &amp; Investments Tom Roche said Macquarie Square presented a huge opportunity for Sydney’s second-largest CBD.
“Macquarie Square is a two-minute walk to Sydney Metro, and will integrate public space, co-working areas, a curated CBD style retail offering, active transport and premium end-of-trip facilities,” Mr Roche said.
“Arriving to market hot on the heels of the record sale of 275 George St, Macquarie Square is an exciting addition to John Holland’s integrated market offering.”
Stage one of the development includes 25,000sqm NLA pre-commitment from the NSW Government.
 The initial building, the Glasshouse, will be complete in March 2020.
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John Holland’s Macquarie Square development launched

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MG Motor Australia has announced 93 O’Riordan Street, Alexandra as the location for the marque’s flagship Sydney metro dealership and office space.
Leasing 1,100 sqm across two levels, the new Alexandria showroom is the first retail space operated directly by MG Motor Australia.'
MG Motor headquarters will remain at their 100 William Street location. 
The new 93 O’Riordan Street MG Motor flagship is leased through Colliers International, with global design retail consultant, Greater Group, delivering the interior design fit-out.  
Kim Nguyen, Sydney City MG Dealer Principal, said, “this new showroom allows us to be a part of the customer journey, while also offering a prime retail position for positive brand exposure – we’re looking forward to opening our new space here, with launch anticipated for Q3 2019.”
MG Motor Australia was recently honoured by parent company, SAIC Motor, as the number one market for sales growth in 2018 globally. Additionally, Werribee MG was recognised as the leading five-star dealership within Australia.
This news follows recent product news from MG Motor, who earlier this year confirmed the marque’s first all-electric vehicle, the eZS, will arrive in Australia in 2020.
MG Motor Australia now has 32 dealerships opened across the country, plus Q1 sales results are 501% up year-to-date, according to VFACTS.
Recently MG Motor expanded into New Zealand, opening four dealers.
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MG Motor Australia reveals flagship Alexandria location

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The residential builder, Maybach Property Group has extended its lease to take the whole floor of an office on Church Street, Richmond.
Teska Carson brokered the Office 1, 577-579 Church Street deal.
The 302 square metre space was let at $156,000 per annum net, an addition to its existing 100 square metre tenancy.
The property comprises a grand foyer, large boardroom, roof top garden with panoramic city views, open plan and partitioned offices, secure access and parking for eight cars.
The lessor is a Melbourne based investor.
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Building group Maybach extends Richmond office lease

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Creative workspace provider Spaces, has been named the winner of the best co-working space in Australia at the 2018 Qantas Business Travel Awards. 
This is the first year that the Qantas Business Travel Awards have given an award for co-working environments. 
CEO &amp; co-founder of Spaces, Martijn Roordink (picutred below) said that "to receive an award from one of the highest rated worldwide and the most popular airline in Australia is very meaningful for us".
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The award-winning office, X street Richmond, Melbourne, was one of the first co-working offices to be opened outside the Spaces headquarters in Amsterdam, Netherlands.
The integrated working environment of the award-winning office consists of desks, tables and booths in an open-plan design with caffeine coming from locally roasted single-origin beans.
Damien Sheehan, head of IWG Australia &amp; New Zealand says that he sees a shift in the workspace landscape in Australia and businesses are now looking closely at what this means for their corporate real estate portfolios.
“We are entering the era of the mobile workforce and it is hugely exciting, not just for individual employees, but for businesses too, there is a workspace revolution underway in Australia and businesses are waking up to the strategic and financial benefits that flexible office space can provide," stated Sheehan.
Today almost 70% of Australian employees are working at least one day a week somewhere other than the office, while 46% of Australian employees work remotely for half of the week or more and one in 10 people also work outside of their company’s main office location five times a week.
Spaces has locations in Europe, Canada, the United States, Latin America, Africa, Australia and Asia.  
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Richmond's X street Spaces wins QANTAS' co-working space award

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The largest leasing deal of the year has seen Suncorp take a lease in Adelaide's newly refurbished 1 King William Street (1KW).
The finance, insurance and banking giant has committed to 4,660 square metres of office space spanning levels four, five, six and 13.
Savills Australia’s Adam Hartley negotiated a seven-year term, with options to renew.
“Suncorp was attracted to 1KW for its ability to accommodate the business’ need for expansive floor space in one building,” he said.
Hartley said Suncorp, which was represented by JLL, was impressed by the property’s location and recent upgrades. 
“1KW has undergone a significant makeover to make it one of Adelaide’s most technologically advanced buildings, targeting a 5.5-star NABERS base building energy rating,” he said.
The ground floor renovations were completed in December which piqued interest.
The 19 storey tower last traded for $38.6 million in 2010.
Prime Super owns 90% of the 1968 building that was constructed by AMP.
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