A long term office demand in Asia Pacific remains positive as a structural shift to tertiary industry in emerging Asia boosts requirements for office space.
The Asia Pacific office landscape stands as a testament to resilience and uniqueness in the global return to office dynamics. With a structural shift toward the tertiary industry in emerging Asia, the long-term demand for office spaces in the region remains robust and positive.
Asia Pacific is Leading the Return to the Office
Asia Pacific takes the lead in the return to the office as companies in the region face fewer challenges in bringing employees back to the workplace. Office attendance in Asia Pacific remains higher compared to the U.S. and Europe.
85% of staff in Asia Pacific work from the office at least 3 days a week
Despite the widespread acceptance of hybrid working models, the majority of companies in Asia Pacific have higher expectations for in-office work. Most employers in the region expect their employees to work fully or at least three days per week from the office.
In contrast, the percentage of employers in the U.S. and Europe who expect full office attendance is much lower, standing at just 7% or less.
Solid Demand for Prime Office Space in Asia Pacific Driven by Flight to Quality
Despite the global trend towards remote work, employees in Asia Pacific show a stronger inclination to work from the office. According to CBRE's 2022 Global Live-Work-Shop Survey, a significant 85% of office workers in Asia Pacific currently spend at least three days per week working at the office. This percentage is higher than that of Europe (78%) and the U.S. (75%). In North Asia, employees tend to spend more time working from the office, while hybrid working arrangements are more common in Australia, Singapore, India, the UK, the Netherlands, and North America.
CBRE estimates that office attendance in Asia Pacific will remain 10%-15% below pre-pandemic levels for the foreseeable future. This suggests that a significant portion of employees in the region still prefer and value the office environment, despite the increased acceptance of remote work.
Factors Encouraging the Return to Office
Several workplace features play a pivotal role in enticing employees back to the office:
Access to Public Transportation (78% preference).
Environmental Features (73% preference).
Free Food and Beverage Options (69% preference).
Dedicated Focus Spaces (71% preference).
Co-worker Tracking (65% preference).
Improved Technology (68% preference).
Singapore’s Office Market Resilience (Q1 2023)
Singapore’s Central Business District (CBD) Grade A office market maintained low vacancy rates despite the rise of shadow office spaces, especially in the tech sector. Shadow space levels have increased from 260,000 sf in Q1 2022 to 328,000 sf in Q1 2023. However, this rise does not indicate widespread market distress. This increase presents an opportunity for firms seeking prime office spaces in Singapore’s tight market with limited new supply.
Landlords offering fitted spaces or capital contributions to offset fit-out costs are well-positioned to meet this demand. Despite recent global banking sector challenges, demand from finance, professional services, and Chinese companies relocating to Singapore is expected to grow. Smaller tech and sustainability-related firms are also seeking office space, diversifying tenant demand.
Singapore’s diversified tenant base and limited office supply indicate market resilience, potentially leading to higher rents in 2023.
“Even as office markets globally continue to face short-term challenges, Asia Pacific remains attractive for office investments over the longer-term. The strong underlying fundamentals include diverse markets, positive office demand sentiments, and robust population-led economies presenting resilient economic growth.”
Chris Pilgrim, Managing Director, Global Capital Markets | Asia Pacific
