Greater China office space demand accelerated in 2021, marked by record high absorption
China employees' strong work-from-office preference a key consideration for corporates
Societal, cultural, and workplace factors to influence changing role of the office
Cushman & Wakefield has released a comprehensive study titled Office of the Future Revisited. The study reports on employees’ thoughts on returning to work, the need for flexible office workspaces, and increased demand for space in office-using industries. The report is based on Cushman & Wakefield analysis of industry leasing data, surveys conducted by Cushman & Wakefield since the onset of the pandemic, and various other sources.
“This report aligns with a couple of key industry trends,” said David Smith, Global Head of Occupier Insights and co-author of the report. “Firstly, the majority of global office workers prefer a hybrid working arrangement, and many companies that have made decisions are currently planning on hybrid, agile work environments. More are expected to go in this direction as leases expire. Secondly, despite the work-from-home rhetoric, market data shows office leasing volumes are surging back, up 41% in the U.S. on a 12-month trailing basis compared to a year ago. To a degree, we believe the hybrid solution is galvanizing the corporate need for office space as the workplace gets reimagined.”
The report also showcases other trends, including industries and geographic areas that have been experiencing growth. Overall, post-pandemic job growth has fared better in industry sectors with jobs that tend to be office-based, such as technology and finance jobs, compared to other sectors of the economy.
“World-leading economic growth combined with strong office-using employment expansion drove accelerated office space demand in Greater China in 2021,” commented Shaun Brodie, Senior Director, Head of Occupier Research, Greater China. “Office market net absorption during the year was the highest on record, as pandemic containment measures were eased to enable a subsequent rapid reopening for business. Across Greater China, 13 different markets saw positive office market absorption for six consecutive quarters, dating back to Q3 2020.”
The global report predicts that the companies that thrive will be the ones that provide employees the choice of where to work. That could require businesses to walk a fine line. While many want to have a remote-work option, Cushman & Wakefield data indicates that employees need the office to support their desire to learn, to make meaningful cultural connections to their organizations, and to engage more deeply with colleagues. Cushman & Wakefield’s Experience per Square Foot™ (XSF) survey data shows many employees rate in-office experiences higher than remote work, and the workers who have the most meaningful experiences are the ones who come into the office multiple days a week. Specifically, Millennial and Gen Z workers are more likely than other workers to report a positive employee experience when they frequent the office three to four days a week, the survey found.
“To compete for and retain talent, companies need to create office environments that inspire employees and give them compelling reasons to come together with colleagues,” added David Shi, Head of Project & Development Services, China. “This is a particular consideration for firms operating in China, where employee preferences are strongly weighted towards working in the office, post-pandemic, in 2020 and 2021. Of the dozen major markets covered by the global report, the percentage of employees in China expressing a preference to work from the office either “never” or “rarely” is by far the lowest. That indicates firms need to pay renewed attention to the quality, comfort, health and well-being, and innovation that their workplaces are offering, including the physical space, technology, workplace experience, and human and automated interactions.”
The purpose of offices is evolving as well, as in-demand employees and hybrid work shape the future of workplaces. A survey of real estate executives conducted by Cushman & Wakefield in collaboration with CoreNet Global found 70% of respondents identified the office as the center of creativity and innovation and the best place to build company culture.
While the shift to hybrid is occurring, Cushman & Wakefield research shows the global demand for office space is starting to return to pre-pandemic levels. The report states that in many countries, industries that are largely office-based are already back to Q1 2020 levels.
“Companies need to have the right real estate in the right locations with the right experience. It’s a business challenge that requires an integrated approach from real estate, human resources, finance, and technology leadership. No longer can these departments work independently; rather, they need to work cooperatively as the organization defines brand, builds culture, develops and refines HR policies, and creates reputation capital,” concluded Despina Katsikakis, Global Head of Occupier Business Performance and co-author of the report.
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms in the world, with approximately 50,000 employees in over 400 offices and 60 countries. In Greater China, a network of 22 offices serves local markets across the region, earning recognition and winning multiple awards for industry-leading performance. In 2021, the firm had revenue of $9.4 billion across core services including valuation, consulting, project & development services, capital markets, project & occupier services, industrial & logistics, retail and others. To learn more, visit www.cushmanwakefield.com
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