How central business districts – and office spaces – are evolving through business demand

Cities are at an inflection point. Gone is the need for one large central commercial area that is the real estate hub of the capital and heavily reliant on office workers. How people live and work, and the urgent need to address broader urban issues mean that significant change is about to take place, starting with evolution of more mini, adaptable central business districts (CBDs) that allow for convenience, accessibility and lifestyle.

CBDs need to reinvent themselves to remain attractive and competitive in an environment of subdued demand for office space, fluctuating commuting and travel patterns, and growing competition from emerging submarkets that offer access to a wide range of amenities, quality office space and rapidly growing populations.

Factors that allow city hubs to succeed:

Adjusting to hybrid working patterns

According to Workshop17, which is soon to open up its fifth CBD location in Hyde Park (pictured), around 60% of office workers expect flexible working arrangements, with employees now working an average of three days per week remotely. CBDs will need to adjust to this new pattern of office use and accept that the hybrid work model is here to stay.

Long and costly commutes make CBDs less appealing

In the new world of work where employees continue to reassess their work-life balance, priorities have shifted and quality of life is now the number-one consideration. Office workers are looking to cut their commute times, with long and expensive trips to CBDs now much less appealing. The solution to this is to have hybrid offices that work within your lifestyle, close to retail and entertainment, which creates ease of access and saves time.

Property obsolescence and accelerating real estate decarbonisation efforts

Ageing buildings in CBDs continue to raise concerns over property obsolescence, which presents a challenge for both occupancy and capital value preservation. Anchor corporates are choosing to move away from large, expensive shells that they need to maintain and decorate, and prefer to partner with developers that give them more freedom in the building process. The aim is to provide the best multifunctional work conditions so that corporations can offer options and attract and maintain the best talent in a competitive market.

Sustainability requirements present an additional challenge for older properties, as buildings will need to meet ever-more-stringent energy efficiency regulations. On a global level, more than 1 billion square metres of office space will need to be retrofitted by 2050. Retrofitting rates need to triple from barely 1% today to at least 3% to 3.5% of stock per year if the global net-zero targets are to be met.

What does a successful CBD look like in 2030?

The key to unlocking the future potential of CBDs is retrofitting, repurposing – converting to alternative uses – and repositioning obsolete real estate.

Paul Keursten, CEO and co-founder of Workshop17, a business that follows a hybrid belief of providing beautiful work spaces, says: “To compete with emerging locations, CBDs will have to mirror their mixed-use characteristics. The changing demands will improve the mix of property types and encourage larger businesses to tailor their needs as well as those of their employees in a way that’s mutually beneficial.”

To showcase this philosophy is the new, partly built and partly refurbished Workshop17 extension located in the Hyde Park Mall. Designed to be a sanctuary for calm and inspiration, Workshop17 has used the latest data from its members as well as international nomad trends to offer something different. Keursten calls it the “workspace trifecta”: hospitality, retail and the option of larger, more corporate, flexible offices.

The 72 offices and 150 hot desks – including library lounges, pause areas and phone booths – are created so that the feeling of a hospitality environment works hand in hand with the convenience of a retail one around you, all under one roof, while supporting local businesses and entrepreneurs. All nationwide locations are available to members, facilitating travel.

Work together

CBDs will shift away from being primarily places of work toward becoming mixed-use destinations that capitalise on being at the heart of transport networks. These will no longer be larger, out-of-town areas but also mini axles that connect residential nodes with access to a wide range of amenities, as well as educational and cultural institutions.

Public and private stakeholders will work together to adapt best practices, adjust planning policies, improve infrastructure and increase investment in sustainability.

Cities will need to embrace change to revitalise CBDs, improve quality of life and address economic, environmental and demographic issues for a sustainable and inclusive future.