A complex interplay of strategic, economic and operational catalysts is driving the corporate office market around the world as occupiers seek to balance growth and innovation with cost control.

Bayleys cites research from its global real estate partner, Knight Frank which says the key challenge for corporate occupiers is identifying and implementing space that works harder for people, performance and purpose.

Knight Frank’s (Y)our Space – Australia and New Zealand report Q1 2025 asked a broad sample of corporate occupiers across the two countries to consider their real estate strategies over the next three years and found that enhancing the workplace experience and reducing costs were the two most significant issues being faced.

Bayleys national head of occupier strategy and solutions, Steve Rendall says despite economic and workforce challenges, it is becoming increasingly clear that the office is here to stay as the drive for productivity continues.

“However, budgetary considerations are far more pressing now than in the last few years, with the Knight Frank report finding almost half of the respondents are targeting real estate cost reductions, reflecting the generally subdued economic climate and greater corporate/stakeholder prudence.

“Looking at the Auckland market, occupiers could be surprised at the opportunities available, and solutions can be found to most problems or challenges, with access to capex a prime example.

“We’re seeing some innovative funding deals being offered by landlords and there are also plenty of premises available with high quality existing fitout that can be repurposed.”

Despite residual pandemic-related disruption and some significant downsizing evident in parts of the market, 62 percent of Australian and New Zealand respondents in the (Y)our Space survey have not relocated premises in the past three years, and most expect their office footprint to remain stable – again a by-product of economic uncertainty, along with high relocation costs.

“Of those that have moved in the past three years, 80 percent did so to improve building quality with the desire for better amenities, an optimised workplace experience, and targeted sustainability outcomes being the main drivers,” says Rendall.

“Space is being used in different ways today, and while flexible work models are now entrenched for corporate occupiers, the centralised office remains vital for most businesses with many tenants opting to better use the space they have rather than relocate.”

More than half of the organisations canvassed in the (Y)our Space survey have formal or informal return-to-office mandates in place, with a minimum of three days per week in the office being standard practice. The underutilisation of space is a key issue with the mismatch between hybrid workstyles and existing workplace layouts fuelling demand for purpose-driven, flexible space that can respond to shifting staff patterns.

A push to enhance productivity and facilitate collaboration among teams saw 61 percent of survey respondents changing workplace layouts, creating more meeting rooms and informal collaboration zones to flex to new workstyles and to attract talent back to the office.

“Having a commute-worthy workplace is important. It’s no longer enough to simply offer a desk – a modern workplace aligns work styles with workspace and reframes the office as a centre for innovation and engagement.”

Sustainability is also a key driver for corporate space decisions with 95 percent of respondents in the Australia-New Zealand survey saying it will influence their real estate strategy over the next three years. Green leases are on the rise, with landlords and occupiers needing to work together to optimise sustainability outcomes and to meet stakeholder expectations and goals.

Bayleys head of building consultancy, David Guy says his team works with landlords and tenants to formulate a roadmap to improvement across a building's lifecycle, providing comprehensive technical due diligence and advisory services to appraise the environmental performance of a building.

“A globally acknowledged Green Star certification contributes to lower operating costs with certified buildings using 66 percent less electricity and 51 percent less potable water than average buildings, and sustainable buildings often having higher market value and attracting premium tenants.

“Other benefits include fewer greenhouse gas emissions, future-proofing against environmental and regulatory changes, and improved occupier health and wellbeing.”