Offices to re-emerge in CBDs as companies de-densify post-pandemic

The offices in Central Business Districts will again become social and business hubs, says JLL.

As cities recover from the pandemic, offices are expected to return to the Central Business Districts (CBD) with more efficient and productive work spaces that reflect a high standard of health and wellness, according to JLL’s new report, Benchmarking Cities and Real Estate.

While physical distancing protocols are likely to end, companies are increasingly facing pressure to re-think their office spaces. JLL’s global survey shows that 37% of employees expect a less dense work environment in the future. The report, Benchmarking Cities and Real Estate, underscores the need for businesses to track space utilization and occupational density metrics to help determine their future office space requirements. 

“Metrics that measure human experience are becoming increasingly important to businesses and cities,” says Jeremy Kelly, Lead Director, Global Cities Research, JLL. “As we move into the next cycle of recovery, we expect offices in Central Business Districts will again become social and business hubs, adapting to accommodate the way people want to work and live in the future.”

Cities that had tight occupational densities pre-pandemic are likely to face pressure to de-densify. These cities fall into three groups:

• Global business hubs: Hong Kong, London and Singapore, with densities of 10 square meters per person or less
• Business process outsourcing destinations: Manila and Bengaluru, where business imperatives and intense usage of space have driven densities to as low as 7 square meters per person
• Emerging mega-hubs: Jakarta and Mumbai, which provide business services for large and growing national markets with densities from 9 to 11 square meters per person 

“While major cities like Hong Kong and London’s high office rental costs could reduce occupiers’ propensity to de-densify, fortunately for Singapore, our relatively lower office rental cost would render the opportunity cost of de-densification more compelling,” explains Tay Huey Ying, Head of Research & Consultancy, JLL Singapore. “Occupiers in Singapore should give due consideration to office de-densification when designing their workplaces, given that two-fifth of Singapore’s employees surveyed by JLL are expecting a less dense work environment in the future.”

In the post-pandemic recovery, the next few years will be pivotal as corporates and cities set and work toward ambitious sustainability targets. Understanding how space utilization and occupational density metrics impact energy and water consumption and waste is becoming increasingly crucial. Tighter occupational densities typically mean lower energy costs and consumption per person. Future sustainability scenarios will need to take into consideration this trade-off between density and efficiency.

JLL’s Global Benchmarking Services measures and reports total real estate costs per person including the amount of space used, occupational density and operational cost metrics that empower businesses to make data-driven decisions about current and future space planning. City governments also draw on these metrics to understand how buildings are used and how efficiently they use resources, in turn informing urban and environmental policy. 

“Having consistent performance baselines that can be compared against local external benchmarks across global locations provides organizations with confidence to implement change as people start coming back to the central city offices,” says Victoria Mejevitch, Head of JLL’s Global Benchmarking Services.

To find out more, please download the report: Benchmarking Cities and Real Estate.