01 Apr 2014
A post-GFC efficiency drive, new working practices and fiercer competition for office space are changing corporate real estate needs across Asia. A new survey of the region’s biggest real estate tenants and landlords reveals why Asian cities will look very different in 2020.
Five years ago if you had asked a Singaporean for directions to the CBD, he likely would have pointed you in the direction of Raffles Place. In Hong Kong you’d have headed to Central, in Tokyo to Marunouchi. Today Asia’s city centres are more difficult to pin down and by 2020 a wave of micro- and satellite CBDs looks likely to have completely changed Asia’s urban map.
A regional study of office trends by Jones Lang LaSalle, released today, gathered 40 leading corporate landlords and tenants from Hong Kong, Singapore, Tokyo, Mumbai, Shanghai and Sydney in a series of roundtable debates. The resulting
Offices 2020 report reveals rapid decentralisation across all six cities as lower rents and new facilities in alternative CBDs, business parks and peripheral centres lure occupiers away from traditional central locations.
Jeremy Sheldon, JLL Head of Markets for Asia Pacific, says the need for greater efficiencies following the Global Financial Crisis was the most commonly-cited reason for moving.
JLL's office stock forecasts for 2020 underline the trend, with growth in decentralised areas outstripping saturated CBDs. In Shanghai, low land availability and expansion of the metro system will drive the region’s biggest change with decentralised Grade A office space set to almost triple by 2020.
In Hong Kong, four new office hubs on Hong Kong Island and Kowloon are expected to emerge as core front office locations. Mumbai’s Secondary Business District, the Bandra Kurla Complex, will see supply growth of 15 per cent per annum.
But unlike some peripheral locations in western cities that historically have suffered from poor infrastructure and connectivity, new hubs in Asia tend to be better served, thanks largely to more streamlined ownership, says Sheldon.
"Asia Pacific markets are still dominated by a few individual players who own entire sites and that allows them to make the whole site efficient and inter-connected. Take the alternate CBD of Hong Kong East. It’s owned by one landlord who controls the roads, the buildings, the entire infrastructure."
Back office staff are first to be moved, with Offices 2020 revealing a reluctance among senior executives to relinquish their view of old, famous landmarks. Dr. Megan Walters, Head of Research, Asia Pacific Capital Markets, explains that while IT facilitates remote working and decentralisation, face-to-face time is still highly valued.
"Companies will always want the Chairman to be sitting in Central. People who get to senior positions are well-networked and that relies on physical proximity."
"That said, premier locations move faster than we think and we’re seeing increasing agglomeration as key players from one industry reach consensus on a new micro-CBD and move at the same time. There’s little doubt the view from our conference rooms in 2020 will be very different to what we see today."