Activity based working: how significant will this new concept become?

October 3, 2011 / By  

In early 2012 Jones Lang LaSalle’s Sydney office will relocate to a new building within the CBD. The new, state of the art premises will operate on an activity based working scheme. Activity based working is designed to have less workstations and more communal areas, meeting rooms and quiet rooms. Workstations are unassigned, and employees will be armed with laptop computers and lockers for personal storage.

Activity based working offers corporate occupiers a range of benefits, but the main draw card is to reduce real estate costs by using office space more efficiently. In many cases office tenancies rarely run at full occupancy. In our case (Jones Lang LaSalle, Sydney) our average occupancy rate -people at desks- is approximately 45%. So the concept of unassigned desks allows corporate occupiers to have fewer workstations than employees and therefore a significantly lower workspace ratio (WSR). We estimate WSR’s for prime grade office space in Australia are approximately 1:15 square metres on average, but occupiers who have already adopted activity based working have been able to reduce their WSR to 1:10 on average.

So what does this mean for office markets and what does it mean for future net absorption?

At this stage there are only a handful of occupiers in Sydney that have adopted activity based working (representing approximately 2.5% of the market), but there is growing interest in the concept, particularly from those in the finance and insurance sector. The finance and insurance sector is forecast to account for 58% of total net absorption in Sydney CBD over the next 10 years. Therefore, if the proportion of tenants employing activity based working were to increase steadily to 58% by 2020, (and assuming that all activity based working schemes achieve a 1:10 WSR), the impact on total net absorption over the next 10 years would be -9.4%, that is, 620,000 sqm instead of 685,000 sqm.

However, it is probably too early to be building in such drastic assumptions to our base case forecasts. There are a range of reasons why the impact might not be that significant. 1. Occupiers may just use space differently rather than leasing less office space. 2. It may not be successful for everyone. 3. In almost all of the examples so far, it has only been employed in new buildings because it is most effective when floorplates are large, flexible and open plan. 4. Older buildings were not designed to handle the additional load of higher densities. Therefore, at this stage we don’t expect the impact on the market to be as significant as 9.4%, but we are monitoring this growing trend as a potential risk.

Notify of

Inline Feedbacks
View all comments

Talk to us 
about real estate markets.