By Vanessa De Groot 27 June 2017

Businesses usually look for a new place to house their operations when a lease is expiring, a fitout’s lifecycle is nearing an end or there’s a change in conditions affecting their size requirements.

Traditionally, the decision to move to a new workplace – and what that workplace would look like - was driven by dollars rather than sense and was left in the hands of the big boss.

These days a more collaborative approach is being taken, with increasing consultation with other company stakeholders.

It’s not just about money anymore

“If you go back in history the decision about where a company would move was always a financial decision, with the aim being to have the lowest occupancy cost,” says Chris Hynes, Head of Office and Industrial Leasing at Dexus.

It was made by the people who controlled the money, such as the chief executive officer (CEO) or the chief financial officer, he adds.

But fast-forward to the present day and it is a very different story.

Attraction, retention and engagement of staff is critical, says Mr Hynes, and this is what now drives the decision for a new workplace.

As a result there is a lot more consultation with various stakeholders about where and what the new space should have, and much more consideration given to the wants and needs of workers.

“What’s happened over the past 10 years is that the non-financial side of the equation is having a greater voice in the decision-making process,” says Mr Hynes.

“It’s now not just about what’s cheapest, but what’s the best thing for a business and its staff?

“The human resources and the strategy teams are getting involved in helping to assess the right property decision, and there is a whole industry of workplace consultants that has effectively been created to assist those companies that haven’t got those resources in-house.”

There are outliers, Mr Hynes says, where company CEOs make executive decisions about a new office, but by and large the new norm is to have a collaborative decision-making process.

“It’s about getting everyone around a table and having a discussion, where they would never have been at that table years ago,” he says.

45 Clarence street Sydney
The decision about where a company would move was always a financial decision.
If you go back in history the decision about where a company would move was always a financial decision, with the aim being to have the lowest occupancy cost

Workers are driving the change

Decades ago employees used to work for one company for most of their working lives and workplaces more or less provided the same thing, so there was no need for businesses to consider what staff wanted.

But there is now greater job mobility, according to Mr Hynes, and workers are looking not just for higher salaries but a better workplace culture, flexibility and amenity.This has spearheaded the change in the decision-making process for companies when looking for a new workplace.

“The premises is a big part of the attraction and retention of staff,” Mr Hynes says, adding that the cost of higher staff turnover exceeds the cost involved in having a better office space.

“Senior executives are far more cognisant of that in the decision-making process now.”

The notion that changing the workplace could change the culture of an organisation – and make it more attractive - was first tried and tested in Australia by MLC in 1999, says Mr Hynes, in the creation of Campus MLC in North Sydney. From there it really took off, filtering down from big companies to smaller businesses.

During the creation of that MLC office nearly 20 years ago staff were consulted on everything from design to colours, and even toilets.

Mr Hynes says the best way to attract and retain staff was to indeed find out what they wanted from their workplace and to give it to them, and many businesses were now undertaking surveys with their workers to do exactly that.

But companies need to be mindful, he says, that once their people voice their wants, if they don’t then provide them this could create more problems.

Tenants want the building to have good visibility, in a location that’s accessible with nearby amenity such as childcare and after work entertainment also being important.
What’s happened over the past 10 years is that the non-financial side of the equation is having a greater voice in the decision-making process

Getting the best bang for your buck

In addition to pricing, companies consider a range of factors in assessing the suitability of a potential workplace.

The location is perhaps more important than the space since you can usually fit the office out any which way you like.

Mr Hynes says tenants want the building to have good visibility, as well as being in a location that’s accessible to their workers. Nearby amenity such as childcare and after work entertainment are also important.

“Tenants are also looking for more flexibility and ways we can help them with juggling their demands for future growth.

“These factors are really at the forefront of thinking,” he says.

Rather than just finding the cheapest space available to house their workers, Mr Hynes says in most organisations there is a desire to find the best space that meets these parameters within their set budget.

“When the market is competitive from a landlord’s perspective, there are opportunities for tenants to find cheaper space, but there’s actually a tendency for tenants to find something better at the same rate they’re already paying.

“When it’s down to two or three choices the money falls away; it’s then about what is the better outcome for the business.

“It’s very different to 20 years ago when money would have had a greater influence.”
one farrer office view
The location is perhaps more important than the space since you can usually fit the office out any which way you like.

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