As vaccination rates improve and economic restrictions are lifted, Malaysia seems to be returning to some sense of normalcy, although concerns over Omicron and employee preferences may see companies adopting a hybrid-work model.
Simon Smith, senior director of research and consultancy at Savills Hong Kong, noted that even before the pandemic, the way people worked had already been gearing towards such a model. Smith’s observations on the various influences behind this were shared at the Rehda Institute’s CEO Series 2022 last month.
One such influence is the shifting demographics of the office worker. According to Smith, the median age of an employee in Malaysia is relatively young at around 30 years old, making them more adaptable to shifting trends compared with those in countries with an older median age.
He believes those of the younger demographic are more tech enabled, socially democratic and environmentally aware, and care less about where work is done as opposed to how it is done.
The other shift pertains to structural economic changes that have seen the switch from manufacturing- to service-based industries.
While disruption exists within the service industry thanks to the advent of artificial intelligence, big data and robotics, tech advancements such as high-speed internet and networking tools have made remote working possible today – a scenario unimaginable just two decades ago.
In developing economies that are urbanising at high rates, governments are able to reimagine city planning with talks of sustainable mixed-use spaces that are better adapted to a hybrid-work environment.
Employees and employers gain
Smith believes neither employee nor employer desires a 100% work-from-home arrangement. Instead, they prefer a hybrid approach to working.
From an employer’s viewpoint, factors such as the size of the home workspace, internet speeds, ease of city mobility, population composition, and the severity of lockdowns may influence the viability of working from home.
On the flipside, employers benefit from reduced costs of office rentals and utility bills when they downsize their office space. Proactive employers would also cater to employees’ wishes to promote a better operating culture and retain talent.
Other factors at play include reducing carbon emissions, ensuring real estate portfolios are sustainable, establishing shorter working weeks, and outsourcing office functions.
A survey from Microsoft last year supports Smith’s assertions. It showed 77% of workers in Malaysia would like flexible remote-work options to continue, while 75% felt more in-person time with their teams was needed.
The solution clearly points to a hybrid-work model that would see staff in the office on a rotational basis.
What it means for office spaces
Even before the pandemic hit, purpose-built office spaces in Malaysia already faced competition from co-working spaces.
In the transition to an endemic era, a hybrid-working model offers a viable alternative for purpose-built office spaces, as opposed to a fully remote-work setup.
However, the outlook for office spaces may remain bleak as companies downsize and find less need for physical setups. According to the National Property Information Centre (Napic), occupancy rates of office spaces further declined from 71.7% in the second quarter (Q2) of 2021 to 70.8% in Q3 that year.
The occupancy rate prior to the pandemic, in Q4 2019, was 75.4%.
In Q2 2021, Napic’s Purpose-Built Office Rental Index also showed downward trends across the Klang Valley, Johor Bahru and Georgetown. As such, purchasers and investors of purpose-built office spaces may wish to remain cautious amid decreasing demand and declining rental rates thus far.
This article was written by Vigneswar Rajasurian of PropertyAdvisor.my, Malaysia’s most comprehensive source of property data, property analytics and insights.