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SYDNEY FORUM MID-TIER
BUILDINGS OPPORTUNITY
KNOCKS
CBRE Advisory & Transaction Services – Occupier
Presented By:
© 2017 CBRE | CONFIDENTIAL & PROPRIETARY 2
CONTENTS / AGENDA
Mid-Tier Buildings
Australian Market Overview
Millennials
Occupier Survey
Wellness
Questions
© 2017 CBRE | CONFIDENTIAL & PROPRIETARY 3
ADVISORY & TRANSACTION SERVICES - OCCUPIERTenant representation experts help tenants identify and align strategic business, financial, and operational objectives with real estate requirements
Jag DhandwarAssociate Director – Business
DevelopmentA&T – Occupier, National
jag.dhandwar@cbre.com.au
Mark SlaterSenior Director – Pacific Head
A&T Occupier, Pacificmark.slater@cbre.com.au
Tristan GannanDirector – State LeaderA&T – Occupier, NSW
tristan.gannan@cbre.com.au
57OPERATIVES IN AUSTRALIA
MID-TIER BUILDINGS
© 2017 CBRE | CONFIDENTIAL & PROPRIETARY 5
MID-TIER BUILDINGS
Mid-tier buildings are found in the capital city CBDs and fringe areas, suburban centres and some regional towns. In the CBD, they are often known for being located in ‘corridor’ areas – parts of the city that are considered ‘secondary’ zones to the main thoroughfare. They are often in the older parts of a CBD with many being some of the first high-rise offices built. In Sydney for example, this would include Chinatown, and the ‘western corridor’ –Clarence and York Streets.
Figure 1: Breakdown of Australian commercial office by grade by PCA grade, 2015.Source: PCA Office Market Report
Breakdown of Australian Commercial Office
by Grade
8%Premium
42%A-Grade30%
B-Grade
16%C-Grade
4%D-Grade
© 2017 CBRE | CONFIDENTIAL & PROPRIETARY 6
WHAT DOES A MID-TIER BUILDING LOOK LIKEMid-tier office buildings generally have the following characteristics
Smaller buildings, generally under 10,000m²
A diverse ownership profile (secondary mid-tier, private, family-owned, strata titled,
government, foreign)
Generally a lower level of energy efficiency than premium or A-Grade
buildings
Generally older, built before 2000
Older HVAC plant and lighting. HVAC is likely to be the original system (25+ years old) with zero
or minimal controls and lighting tends to be T8
magnetic ballastfluorescent tubes
A mixture of smaller offices, with mainly small and
medium enterprise (SME) tenants
Shorter lease terms than premium and A-Grade
assets
Less rent per square metre
Generally no on-site dedicated team for
property/facilities management
Other terms commonly used to describe this class
of buildings includes ‘secondary’ or
‘sub-prime’.
AUSTRALIAN MARKET
OVERVIEW
© 2017 CBRE | CONFIDENTIAL & PROPRIETARY 8
AUSTRALIAN CBD & OFFICE KEY MARKET INDICATORS & FORECAST DIRECTIONQ1, 2017
LegendV – VacancyPR – Prime Net Face Rent PY – Prime yield
Arrows indicate 2017 calendar year forecast
V –
V – 21.1%PR – $592
Perth CBD
V – 16.1%PR – $418
Adelaide CBD
V – 6.5%PR – $565
Melbourne CBD V – 11.4%
PR – $375
Canberra
V – 5.09%PR – $1,065
Sydney CBD
V – 15.7%PR – $628
Brisbane CBD
Source: CBRE Research
© 2017 CBRE | CONFIDENTIAL & PROPRIETARY 9
SYDNEY RENTSNet Effective Rental Growth
Source: CBRE Research
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
Prim
e N
et F
ace
Rent
($/s
qm)
Sydney CBD North Sydney Crows Nest St Leonards Chatswood Macquarie Park Parramatta
Forecast
© 2017 CBRE | CONFIDENTIAL & PROPRIETARY 10
LOCAL MARKET CONDITIONS & PREDICTIONS
Rent
Vacancy
Incentive
Current
Projected
Current
Projected
Current
Projected
Sydney CBD North Sydney
South Sydney
MILLENNIALS
© 2017 CBRE | CONFIDENTIAL & PROPRIETARY 12
AUSTRALIAN MILLENNIALS – WHO ARE THEY?
22-39
73%
74% 18%
54%
35%BASED ON THOSE AGED
HAVE A DEGREE OR STUDYING FOR ONE
ARE EMPLOYED
LIVE WITH THEIR PARENTS/FAMILY HOME
(Much lower than Asian Countries – 70%)
MARRIED OR LIVE WITH A PARTNER
(Much Higher than Asian Countries – 37%)
HAVE INCOME GREATER THAN $100,000Source: CBRE Research
© 2017 CBRE | CONFIDENTIAL & PROPRIETARY 13
WELLNESS FACILITIES ARE A DRAW CARD FOR AUSTRALIAN MILLENNIALSWhich, if any, of these facilities would have an influence on you when thinking about taking a new job?
45%Of millennials like their current office layout
PERCENTAGE OF RESPONENTS 0 10 20 30 40
Wellness/Relaxation Facilities
Sleeping/Rest Areas
Green Space in Building/Rooftop Gardens
Games Room
Childcare Centre
On-Site Convenience Store
Canteen
Dry Cleaning Service
Ability to Receive Shopping Deliveries
Coffee Bar
Bike Racks
Showers
WELLNESS/RELAXATION FACILITIES
Is the biggest influence on millennials when looking for a
job
SLEEPING/REST AREAS, GREEN SPACE, GAMES ROOM & CHILDCARE
CENTRESAre highly desired compared to
what’s currently provided
Desire
Currently ProvidedSource: CBRE Research
© 2017 CBRE | CONFIDENTIAL & PROPRIETARY 14
MILLENNIALSWHAT IS IMPORTANT TO THEM?Office design & layout is important, but working relationships & environment is more important
Source: CBRE Research
77%Good Employers
put a lot of thought into the
working environment
74%Working
relationships are one of the most
important aspects of work
72%Good design &
layout of an office has a positive impact on the staff that work
there
65%I consider myself lucky to have a
job at all
65%In the current job market, it’s very difficult to find a job that really
excites you
62%I would like to
have flexibility on where I work from
on a given day
61%It is important to
take some risks in your work life
Source: CBRE Research
OCCUPIER SURVEY
© 2017 CBRE | CONFIDENTIAL & PROPRIETARY 16
HOW WILL OCCUPIERS CHANGE THEIR STAFF SIZE AND NLABY 2018?
Overall, the workplace ratio is predicted to decrease by
5.5%
Number of Staff NLA
58%Stay the
Same
20%Decrease
22%Increase
34%Stay the
Same
9%Decrease
57%Increase
2016 2018 Change
Mean – Staff 336 362 +6.8%
Mean – NLA SQM 5,608 5,634 +0.5%
Avg SQM/perperson 16.5 15.6 -5.5%
More people in
less space!
Source: CBRE Research
Base: All respondents (n=100)
© 2017 CBRE | CONFIDENTIAL & PROPRIETARY 17
WHAT IS THE NEXT FRONTIER OF SERVICES DELIVERY TO CUSTOMERS OF OFFICE BUILDINGS?
As buildings increasingly
deliver flexible work solutions,
businesses will shift their focus to
wellness offerings
77%
Work Environment
Supporting flexible work practices
Floorplate flexibility / Felixible leasing plans
Shared facilities e.g. meetings rooms, co-working space
Environmentally friendly / sustainable buildings
74%
Health & Wellness
General health and wellness
Food provision / delivery
Gyms
Childcare
Green Spaces
72%
Tenant Services
Full service Concierge
Improved service delivery fro building managers / landlords
Shared business support services
Other tenant services
65%
Building Infrastructure
Greater technological capability
Internal environment e.g. air filtration, lighting
Parking
Source: CBRE ResearchBase: All respondents (n=100)
© 2017 CBRE | CONFIDENTIAL & PROPRIETARY 18
WHAT THE FUTURE HOLDS
2017
2020+
End of Trip Facilites
Proximity to Public Transport
Rent ConferencingFacilities
On-Site ChildcareFacilities
Concierge
Environmentally Friendly Building
On-Site Services (Medical, Dentist,
Hairdressing)
Wellness
© 2017 CBRE | CONFIDENTIAL & PROPRIETARY 19
PAIN POINTS / FRICTIONWhat are some of the constant pain points / friction that you and your clients experience
ON-GOING ENGAGEMENT
INDIRECT COSTSBUILDING SERVICES
PERFORMANCE
PREMISES UPGRADES
LIMITED “OUT OF CYCLE”
ENGAGEMENT
© 2017 CBRE | CONFIDENTIAL & PROPRIETARY 20
BUSINESS CHALLENGES IN THE NEW NORMAL
WELLNESS
© 2017 CBRE | CONFIDENTIAL & PROPRIETARY 22
WELLNESS IS RISING UP THE CORPORATE AGENDAHow are your clients viewing or assessing “wellness” aspects of their accommodation?
CBRE has identified FIVE TRENDS that are driving interest in Wellness in the workplace
1 2
3
4 5Technology is making it
easier for people to manage their health
Awareness of stress & mindfulness is growing
Employees are living longer
But they’re less healthy
Key skills are hard to find
$70bn:79%
80%Average life expectancy for both men and women has increased
by 2 years since 2005Worldwide obeisity has
nearly doubled since 1980
of employees say wellness programmes would be crucial
to attracting and keeping them over the next 10 years
of people say that balancing private and
professional commitments is a cause of stress
the size of the market for wearable health
management technology 2025 will be
Source: World Bank, 2016Source: World Health Organisation, 2016
Source: CoreNet Survey: Sustaining Talent Through Wellbeing in the
Workplace, 2014
Source: CoreNet Survey: Sustaining Talent Through Wellbeing in the
Workplace, 2014Source: IDTechEx
© 2017 CBRE | CONFIDENTIAL & PROPRIETARY 23
WELLNESS IS RISING UP THE CORPORATE AGENDAHow are your clients viewing or assessing “wellness” aspects of their accommodation?
74%
Of European Occupiers have a
Wellness Programme in Place
By 2040 the lines between home and work will have blurred. Medical treatment won’t be restricted to the clinic. And the workplace will offer responsive features such as advice and healthy dietary options. This will boost our health, performance and productivity
What will this mean for the future of Wellness in
the Workplace?
There is an opportunity for organisations to boost their competitiveness, attract talendand manage their employee costs by introducing wellness initiatives.
To achieve lasting successful wellness programmes, they should:
• Create a wellness strategy• Carefully consider workplace
design• Flex their programmes
according to local culture• Use a set of clear measures to
demonstrate return on investment
• Take a cross-organisational approach
How Should Organisations Respond?
RESEARCH:WELLNESS IN THE WORKPLACE
This new report from CBRE Global Workplace Solutions examines the growing wellness phenomenon, discusses the drivers behind it and makes recommendations on how organisations can respond.
© 2017 CBRE | CONFIDENTIAL & PROPRIETARY 24
“PEOPLE AND COST - A SIMULTANEOUS FOCUS”
The right open-plan/agile workplace = business success
Occupiers who have recently redesigned their workplace are more satisfied.
Tenants planning to move look for technology, indoor air quality, lift performance, floorplate efficiency and wellness.
But – buildings are not measuring up.
Workplace strategy evolution and portfolio optimisation are now top real estate priorities.
More people - less space.
Floorplate efficiency risen in importance.
Work-life blend the new frontier
Wellness a productivity strategy
Major organisations looking for improved technology,
wellness, shared workplace facilities and childcare for
employees.
CUSTOMEREXPERIENCE
Increased productivity
Employee Engagement
Cost optimisation
QUESTIONS?
CBRE © 2016 All Rights Reserved. All information included in this proposal pertaining to CBRE—including but not limited to its operations, employees, technology and clients—are proprietary and confidential, and are supplied with theunderstanding that they will be held in confidence and not disclosed to third parties without the prior written consent of CBRE. This letter/proposal is intended solely as a preliminary expression of general intentions and is to be used fordiscussion purposes only. The parties intend that neither shall have any contractual obligations to the other with respect to the matters referred herein unless and until a definitive agreement has been fully executed and delivered bythe parties. The parties agree that this letter/proposal is not intended to create any agreement or obligation by either party to negotiate a definitive lease/purchase and sale agreement and imposes no duty whatsoever on eitherparty to continue negotiations, including without limitation any obligation to negotiate in good faith or in any way other than at arm’s length. Prior to delivery of a definitive executed agreement, and without any liability to the otherparty, either party may (1) propose different terms from those summarized herein, (2) enter into negotiations with other parties and/or (3) unilaterally terminate all negotiations with the other party hereto. CBRE and the CBRE logo areservice marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks displayed on this document are the property of their respective owners.
Gracias. Thank You. 謝謝. Salamat.Obrigado. شكرا Спасибо. 감사합니다.
£œª •⁄¥. Danke. ありがとう. Merci.
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