Future of the office is up in the air as pace of change speeds up

May 7th, 2011

by Carolyn Cummins – smh.com.au

WHAT an office will look like and how it will be used in the next few decades has again been raised as companies review their rental agreements and prepare for an increase in expenses.

The two biggest costs for any organisation are payroll and rent. Gone are the days of companies owning their head offices. The money tied up in bricks and mortar years ago was deemed idle cash that could be better used growing the business.

As a result finance directors, who for many years had to double as property managers, decided to raise cash through the sale of the head office.

And for those that could drive a hard bargain, they negotiated long-term rents at reasonable levels to lower the costs.

But as available office space shrinks and those rent deals come up for renewal, the landlords are in a position to seek higher payments.

But is a large office needed?

Dr David Rees, the Australasian head of research and consulting at Jones Lang LaSalle, says that as technology improves, demand for office space is changing. Yes, we still need offices, but just how much?

In the Hot Property column in Commercial Real Estate today, Dr Rees asks: ”Do you think that your grandchildren will work in an office?”

”If the answer if ‘yes’, then you believe that the wave of demography and technology that propelled so many of us from farms, mines, factories and corner stores into offices in just three generations has suddenly skidded to a halt,” he says. ”The facts suggest otherwise. The pace of change seems to be speeding up, not slowing down.”

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