Japan and Australia Remain the Most Expensive Office Fit-out Markets in Asia Pacific

 

Asia Pacific is forecast to emerge from the downturn earlier than other regions across the globe and is well-positioned to return to strong economic growth by the turn of 2021. While the region’s long-term fundamentals remain intact, the short but sharp recession will continue to echo and shape corporate decision-making into the future. Effectively, trends that may have taken many years to come to full fruition are being fast-tracked. 

“As a result of the global pandemic, the increases in fit-out costs seen in recent years has reversed in most markets across the region. This trend is likely to persist as corporate occupiers continue to assess their capital expenditure budgets and corporate footprint requirements,” said Tom Gibson, Head of Project & Development Services, Asia Pacific. “We are also seeing greater integration of workplace strategy expertise into the early stages of the design and fit-out process. With working lifestyles and preferences evolving following the pandemic, companies are increasingly focused on aligning their space requirements with efficient workplace strategies and HR policies to better meet their corporate business and financial goals.”

Greater emphasis on health & safety and contingency planning, with new design trends focused on “touchless technology” and collaborative space

The focus on health and safety continues to intensify, bringing forward greater adoption of touchless technology, improved Heating, Ventilation, and Air Conditioning (HVAC) and smarter cleaning practices. Prolonged, enforced working from home has highlighted that productivity can be maintained, but at the cost of personal connection to colleagues and company culture. This raises questions around the optimal size and composition of the corporate footprint, while highlighting the need for ongoing investment into IT and audio-visual technology for collaborative team working. All these factors are important considerations as companies remain laser-focused on costs. 

Mr. Gibson said, “The solution is to place a greater emphasis on strategic collaboration between corporate finance, human resources, corporate real estate, and workplace strategy. Companies are having to manage multiple levels of uncertainty and as a result, have a greater thirst for information. The role of the project manager remains pivotal to this solution by bringing meaningful data insights to clients, exposing them to best practices in the ‘new normal’ and assisting in making well-rounded decisions.” 

Haidee Lim, Director and Head of the Project & Development Services at Cushman & Wakefield Philippines said, “The significant increase on the fit-out cost in the Philippines is due to the additional cost for safety mandated by the government and landlords. In the Philippines, construction companies are required to provide complete PPEs for the workers, transportation and lodging, COVID-19 safety essentials at site and COVID-19 testing which entails additional costs.”

Claro Cordero, Director and Head of Research, Consulting & Advisory Services at Cushman & Wakefield, further adds, “The expectation of a recovery in the economic activities – and by extension, the various real estate activities – in the mid-term pushed the over-all fit-out cost higher in the Philippines. The resurgence of demand from information technology and business processing management (IT-BPM) companies is expected once the pandemic settles, in anticipation of many businesses and corporates turning to the tested outsourcing model.”

“Many corporate occupiers are also expected to update their office designs in lieu of the minimum occupational health & safety standards being imposed by the government. The pandemic paved the way for a more complex workplace ecosystem that redefines the difference between space per person and space per work point, as occupiers shift the mix of space from predominantly individual to more collaborative and communal. The future of workplace and design points to more collaborative environment, as the office space takes on an evolving role to promote further collaboration and company culture amidst the new hybrid (office-based and remote) of corporate workforce”, Mr. Cordero adds. 

 

About Cushman & Wakefield’s Asia Pacific Office Fit-out Cost Guide: