ACTIVITY BASED WORKING

While Activity Based Working (ABW) is yet to take off in a significant way in Dublin – with Airbnb and PwC believed to be among the few early pioneers here – international trends inform us that ABW is set to become an ever more prominent feature of Dublin’s office landscape in the coming years. Globally, Australia has been the early forerunner in developing ABW while occupiers in Asia are also increasingly embracing the practice, with a survey conducted by Knight Frank showing that over half of active occupiers in six key gateway hubs in Asia-Pacific are seeking to implement ABW. Given the rising global importance of the phenomenon, we look at the features of ABW and what occupiers and landlords need to know.

WHAT IS ACTIVITY BASED WORKING?

Activity Based Working is based on the premise that the old office model of fixed work stations is broken, with mounting evidence to suggest that a company’s productivity – and thus its bottom line – can be boosted by more fluid work arrangements that increase face-to-face interactions between workers. In the ABW workplace, assigned seating gives way to common spaces and break out-spaces, with knowledge sharing and collaboration lying at the heart of this new working environment. While some have honed in on the non-assigned seating aspect of ABW to regard it as a contemporary incarnation of hot desking but in a different guise, the distinguishing characteristic of ABW is the focus on boosting productivity rather than cutting costs. In the old real estate occupier model, the term ‘driving operational efficiencies’ was a euphemism for minimizing real estate cost per worker, as companies viewed their real estate provision solely as a cost rather than as an asset which can be utilised to boost productivity. Studies showing how increasing intra-firm worker engagement facilitates knowledge transfer across the firm have helped to change this way of thinking and allowed real estate’s role in achieving higher revenues enter the equation.

THE ROLE OF TECHNOLOGY IN GROWING ACTIVITY BASED WORKING

Technology has been a key driver in shaping the demand for ABW. When the internet first arrived on the scene, investors piled into suburban office parks in the belief that the instant communication it afforded over great distances would make the need for a city centre location redundant. However, the opposite has proved true, with the evidence showing that the more people communicate electronically, the more they are likely to meet in person also. Thus, far from negating face-to face interactions, technology has spurred the demand for greater face-to face interactions of the type that ABW seeks to enable.

Similarly, the early days of the internet saw many predictions that it would lead to a long-term drift towards working from home. However, this trend has also failed to ignite, as highlighted by Yahoo’s then CEO Marissa Mayer banning of the practice in 2011. Summarising her rationale, she stated that ‘to become the best place to work, communication and collaboration will be important…some of the best insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings”, goals which ABW seeks to achieve.

Furthermore, in the competition for talent, ABW can become a differentiator between firms seeking to attract Millennials. Millennials – those born between 1980 and 2000 and who will account for half of the global workforce by 2020 – have been shaped by the digital revolution. They are typically tech savvy, ‘always-on’, connected and informed while seeking a meaningful and collaborative work experience that allows for a healthy
work-life balance. ABW is in part a response by companies to cater for the demands of Millennials, through the provision of games, relaxation zones and food services that blur the lines between work and home.

OUTLOOK

At a general level, some important macro trends arising from ABW will be:

• Reduction in overall demand for office real estate over the longer term – while the overall objective of ABW from an occupiers point of view is to boost revenue rather than cut costs, the natural consequence of having less desks per worker will
be a reduction in aggregate demand for space.

• Enhance occupier flexibility – ABW confers occupiers with greater flexibility in managing the space they rent. While flexibility in the past was often achieved through taking on more space than was needed and subletting the rest, ABW allows increased ability to scale up and down without leasing new space.

• Increase in demand for third space retail real estate – with workers no longer tied to their desks, third space retail – café’s being the most widespread example – located in proximity to office locations will further increase in importance in
their roles as quasi places of work for staff where they can work solo
or hold meetings.

For Dublin specifically, it is our view that a major international co-working firm’s recent decision to establish a presence here – they are rumoured to be taking 100,000 sq ft spread over two locations in Dublin – marks a key milestone in the embracing of ABW culture in Dublin. ABW and co-working are closely related in their philosophy of how office spaces should function, with both sharing an emphasis on achieving collaborative work environments with appealing lifestyle elements. Furthermore, in an important Q2 development with potentially far reaching implications for Dublin’s office sector, IBM have signed a deal to rent an entire building from
a co-working operator in New York, as the latter seeks to diversify its client base from fast growing but cash flow volatile start-ups to Fortune 500 companies with strong balance sheets. The linkages of this type of development with ABW are clear: large companies that implement ABW can use co-working providers to add another layer of flexibility to their real estate portfolio, enabling them to scale up or down more easily as market conditions dictate.

 

Knight Frank

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