Premium Offices Pull Ahead as Owners Rethink Workplaces
The commercial real estate landscape is undergoing a significant shift, with premium office owners repositioning their properties to meet the evolving needs of tenants. According to a recent discussion with four leading Australian office owners, Charter Hall, GPT, Dexus, and IFM Investors, the demand for high-quality office spaces is on the rise, driven by occupiers' increasing emphasis on location, wellness, amenities, and workplace experience.
Experience-Driven Office Spaces
Charter Hall's Fiona Denison compared office portfolio management to running a hotel, highlighting the growing importance of experience in premium office spaces. "Premium offices now compete through experience as much as workspace," she said. This shift is raising costs and rents as owners invest in amenities such as Pilates studios, basketball and pickleball courts, stronger end-of-trip facilities, and even ice baths. However, Denison noted that not every amenity is essential, and tenant expectations around wellness are higher than ever before.
Curating the Workplace Experience
GPT Group's head of office, Matthew Brown, emphasized the importance of an experience-first approach in office development. "We increasingly view office as a service rather than a commoditized product," he said. This approach involves curating the workplace experience to create a sense of community among tenants and their employees. Brown highlighted the need for regular dialogue between landlords and tenants to understand business and workforce needs, which is critical in supporting healthier workplace routines.
Forever Fitouts: A New Approach to Office Leasing
Dexus is pioneering a new approach to office leasing with its Forever Fitouts model. This approach aims to reduce the financial and environmental cost of traditional fitouts, which are often removed after a five- to seven-year lease. Dexus's executive general manager, Andy Collins, explained that the model involves designing turnkey interiors that can adapt for a second or third tenant, reducing downtime between leases and lower incentives over time. The first pilot at 1 Bligh Street was co-designed with Woods Bagot and the Clean Energy Finance Corporation, which occupies the space. Dexus is now seeking more data to test the model's financial and environmental performance.
AI-Driven Growth Opportunities
IFM Investors' head of property, Amanda Steele, highlighted the impact of AI on office ownership. While AI creates both risk and growth opportunities, Steele expects companies using AI effectively to take more Prime and A-grade space with strong amenities. This trend may deepen the divide between high-grade and lower-grade assets, with Prime buildings being positioned for collaborative and creative work, while some administrative demand is under pressure. Steele emphasized the importance of critical thinking and creativity, which still require human involvement, reinforcing the workplace strategy around high-quality space.
Next Phase: Execution and Data-Driven Decision Making
As premium office owners continue to invest in experience-driven spaces, they will be looking for more data on occupancy, rent performance, downtime, and incentives as these strategies scale. Dexus plans to expand its Forever Fitouts experiment, while IFM will continue building AI capability within its workforce and monitoring how technology changes tenant demand. GPT and Charter Hall are also signaling that amenity and service investment will remain central to premium office strategy. The next phase is a test of execution, where owners will need to demonstrate the effectiveness of their strategies in driving business outcomes.
