Hong Kong demand picks up for offices that promote well-being and belonging

With the rise in hybrid working and higher staff expectations, more firms are choosing offices with wellness, ESG and a sense of community to boost productivity

Neil Anderson

Published: 3:45pm, 30 Apr 2023

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Hong Kong’s workplace landscape is undergoing a significant transformation as companies adapt to the post-pandemic era. The social contract of the workplace in the city has shifted more towards flexibility, wellness and collaboration. This shift is apparent as Hong Kong continues to leverage its position as the financial centre of the Greater Bay Area, attracting both local and international businesses.

Recently, there has been a noticeable increase in optimism and interest surrounding commercial property. According to Cushman & Wakefield, the grade A office market recorded “positive net absorption” of over 250,000 sq ft last year, reversing the contraction experienced in 2020 and 2021.

In everyday language, this means there are more people occupying space than before. It’s an interesting indicator of whether companies are downsizing or expanding.

We are seeing leasing enquiries surpass pre-pandemic levels and while it will take time for these to mature into transactions and be reflected in the occupancy figures, these encouraging green shoots of recovery reflect a return in demand from domestic, international and Chinese companies.

Hong Kong’s unique dynamics, including short commutes and exceptional public transport networks, set it apart from other global cities. Also, working from home is not always feasible for some employees, and some prefer to go back to the office for higher productivity and face-to-face collaboration with colleagues.

This is in sharp contrast to the United States, where office occupancy remains at 40-60 per cent of pre-Covid levels. According to Cushman & Wakefield’s recently published report “Obsolescence Equals Opportunity”, only 17 per cent of workers in the US and 16 per cent in the United Kingdom prefer to return to the office for three or more days per week. In China, this is the preference of more than 80 per cent of workers.

There is a growing preference around the world for hybrid working: spending part of the week at home and the rest in the office. Photo: Getty Images

In response, many companies in Hong Kong, particularly multinational corporations and banks, are adopting hybrid work arrangements, offering employees greater flexibility as a necessity rather than a benefit. This has become an attraction for new employees and supports talent retention, especially among younger workers.

But in an era of occasional remote work and many virtual meetings, companies face the challenge of how to foster a sense of community and belonging.

Both employees and employers expect far more from their working space. From hospitality and wellness to sustainability considerations, today’s workplaces must cater to a wide range of needs and expectations.

Many of our tenants are redesigning their spaces to promote greater collaboration and productivity. Workplace wellness is no longer optional but an expected feature of both modern offices and company policies.

Companies are incorporating wellness features such as de-stressing areas, height-adjustable desks, indoor air quality monitoring, meditation rooms and even on-site coffee bars with baristas. They are curating space with hospitality features like music and aroma, and even games rooms.

The aim is to bring the space to life and provide a more personalised experience to employees. Designing office space with employees in mind gives them a sense not just of belonging but of ownership as well.

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Environmental, social and corporate governance (ESG) considerations have also become increasingly important in the decision-making process for prospective tenants.

Tenants want to see a Building Environmental Assessment Method (BEAM) certificate or one for Leadership in Energy and Environmental Design (LEED) and properties with these credentials tend to perform better, in terms of both occupancy and rental rates. The occupancy difference observed typically varies between 3 and 5 per cent, while the rental difference could range from 5 to 25 per cent. For tenants, it has effectively become a “hygiene factor”, a necessity that causes dissatisfaction when absent.

Finally – and this is something we hear all the time from our tenants in Central – they are looking for more than just a modern, well-designed office. They want access to a community of like-minded business leaders and decision-makers supported by a nearby array of food and beverage, retail, cultural and lifestyle options that can enrich the experiences of their employees and motivate them to be in the office.

Acknowledging the significance of office spaces that promote well-being and a sense of community allows companies to develop work environments that encourage teamwork, efficiency and culture-building.

As a result, when selecting an office, tenants still consider various elements such as location, connectivity to a business network and rental costs, but place a growing emphasis on prioritising spaces which address the needs of the new generation of office workers and the changing nature of the modern social contract of the workplace.

Neil Anderson is director and head of office for commercial property at Hongkong Land