Rethinking the Office Sector in Asia Pacific

OFFICE OCCUPANCY AND DENSITY PROVIDE TAILWINDS

FIGURE 2: ESTIMATED OFFICE ATTENDANCE LEVELS FOR SELECT MARKETS

While the underlying growth in office employment provides arguably the strongest driver of office demand, further support is provided by office occupancy rates and density levels. The return to office in the U.S. and across parts of Europe, although continuing to improve, remains comparatively weak by standards seen in Asia Pacific. For example, office occupancy in Greater China is practically back to 100% of pre-COVID levels while in Tokyo, it is over 85% (Figure 2). Even in markets that have greater adoption of flexible working practices such as Australia, office attendance is as high as 80% in some cities. In comparison, current levels in the U.S. are around 50% (ranging from 40% to 60%) and are a touch lower in the U.K., serving to highlight that the office remains an integral part of the workplace across much of the Asia Pacific region.

Source: Kastle Systems, Property Council of Australia, Cushman & Wakefield

Furthermore, office densities in the region are amongst the highest in the world, averaging from as low as 75 sf per worker up to approximately 110 sf per worker. The implication here being that these office densities are unlikely to become tighter, rather they could move out in response to not only health concerns but also as different fit out typologies, which incorporate more collaboration spaces, become more prevalent. Anecdotal evidence

in Australia suggests that this is occurring with pre-COVID target densities set at 110 sf and current targets closer to 130 sf. In some markets with high levels of attendance, this could exacerbate office demand as more space is required by more workers, while in markets adopting more flexible working practices it could help offset lower space demand – i.e. fewer employees in the office but more space per employee.

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RETHINKING THE OFFICE SECTOR | OPTIMISING YOUR ASSET FOR A NEW ERA | ASIA PACIFIC 14