- Six Greater China markets figure in top 20 most expensive office fit-out markets in Asia-Pacific
- Hong Kong remains the most costly market in Greater China for the third consecutive year
- Permanent hybrid planning where costs are still being closely scrutinized
The COVID-19 pandemic over the last two years has greatly impacted the workplace. As markets continue to tackle the ongoing impacts and the rise of the Omicron variant, corporate occupiers are increasingly adopting more flexible working practices.
"We have seen a shift in how corporates are envisioning their space requirements, which in turn impacts fit-out decision-making, all within an environment where costs are still being closely scrutinized. Besides the application of thoughtful design and fit-out standards, there is the need for corporate occupiers to provide employees with seamlessly integrated technology solutions for both onsite and offsite working. There is also a greater emphasis on providing a workplace that is not only environmentally friendly but also has the employees’ well-being at heart,” said Tom Gibson, Head of Project & Development Services, Asia Pacific.
According to Cushman & Wakefield’s 2022 Asia Pacific Office Fit-Out Cost Guide, the three key office fit-out trends for 2022 are:
1. Planning for permanent hybrid
With Asia Pacific countries in varying stages of Return to Office, occupiers are incorporating an increasing spectrum of flexible working practices. Fit-out typologies are also changing, providing more collaborative spaces as well as space for focused work. There is growing interest in understanding how to engineer an ideal hybrid ecosystem — how much space is needed, what this space should look like, and how much it will cost to fit it out, as well to meet the ever-growing design demands of the flexible workforce.
2. Designing for experience
Insights from Cushman & Wakefield’s bespoke workplace strategy tool, Experience per Square FootTM (XSF), have shown that employees across all markets desire greater workplace flexibility, though to varying degrees. Employers are investigating how to embrace greater flexibility while also maintaining corporate culture and equity of employee experience and are increasingly preferring quality over quantity of space. High quality buildings that provide the highest quality health and wellbeing credentials are mandatory, as is the need for seamlessly integrated technology solutions for both onsite and offsite working. The application of thoughtful design and fit-out standards is crucial in order to reflect the role and purpose of the office, which is all about experience, engagement, collaboration, culture, and wellbeing.
3. Incorporating ESG
We are seeing occupiers and investors placing greater emphasis on Environmental, Social, and Governance (ESG) considerations across all aspects of their real estate footprint as they address challenges related to the war for talent, corporate ESG commitments, and the rise of green capital. Occupiers are increasingly seeking green and wellness certifications for their projects and are engaging consultants early in the design process. Project managers play a pivotal role here by exposing clients to the latest workplace design strategies and assisting the integration of ESG principles into their workplace.
"The 2022 report reveals that six Greater China markets figure in the top 20 most expensive office fit-out markets in Asia-Pacific. Hong Kong remains the most costly market in Greater China for the third consecutive year, followed by Shenzhen, Beijing, Guangzhou, Shanghai and Taipei. Across mainland China, occupiers are increasingly seeking green and wellness certifications for their projects and are engaging consultants early in the early project stage to provide inputs in project programming, budget setting, and design specs,” commented David Shi, Head of Project & Development Services, China, Cushman & Wakefield.
“The impacts of force majeure and inflation are the current challenges in the industry, resulting in escalation of construction costs in general. Mitigation plans need to be established in advance to curb the implications of such costs. So, what should an occupier or investor do? To minimize the impact of construction costs, as well as longer delivery times, the majority will say we need an accurate estimate. In fact, that’s far from enough, and we need flexibility in terms of design, timing, or cost-sharing, as well as adopting new technology and construction methods, and end-to-end strategy planning. Projects can then run smoothly prior to construction, during construction, and throughout the operational stage, without major delays or unforeseen costs,” added YM Mok, QS Director, Project & Development Services, China, Cushman & Wakefield.
Cushman & Wakefield’s report revealed the average office fit-out costs for 31 cities in Asia Pacific. The top 20 cities in Asia Pacific with the highest office fit-out costs are:
Source: Cushman & Wakefield
The Asia Pacific office market has remained resilient, being the only region to have posted consistent, positive office demand since the pandemic began. Looking ahead, we expect a fuller return to the office as higher vaccination rates allow economies to open more fully, which will potentially drive office demand over the year ahead. Net absorption is forecast to increase from 55 million square feet (msf) in 2021 to around 72msf in 2022 before returning to pre-pandemic levels of around 82msf in 2023. This positive forecast bodes well for the office fit-out market in the region.
Click here to download the 2022 Asia Pacific Office Fit-Out Cost Guide.
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms in the world, with approximately 50,000 employees in over 400 offices and 60 countries. In Greater China, a network of 22 offices serves local markets across the region, earning recognition and winning multiple awards for industry-leading performance. In 2021, the firm had revenue of $9.4 billion across core services including valuation, consulting, project & development services, capital markets, project & occupier services, industrial & logistics, retail and others. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
