Hot-desking trend heats up

A HOST of high-profile companies are moving towards "hot desk" workplaces to cut costs.

By InvestSMART · 17 Nov 2012

By InvestSMART ·
17 Nov 2012

Comments

A HOST of high-profile companies are moving towards "hot desk" workplaces to cut costs.

Suncorp, BHP, ANZ and NAB are among companies to take up the practice as they consolidate in existing buildings in the CBD and new facilities at Docklands.

The trend comes as workers have seen the size of their personal workspaces reduce by as much as half in the past 20 years.

Hot desking - formally known as "activity-based working" - may shrink the floor space a business needs by 30 per cent, according to Knight Frank.

Under the model, offices are refitted with standardised workstations that can be used temporarily by any employee, eliminating the "wasted" space left vacant by workers on different shifts, annual leave, secondments or business trips.

"It's getting very big - there's no doubt about it," said Hamish Sutherland, Knight Frank's state leasing director.

"You can use activity-based working literally on any floor plate, but you've got to have a good quality building in terms of its services in order to support these new workplace philosophies."

The system, which can also avoid taking on extra space during an expansion phase, has been used for several years in the US and Europe. More recently, it has been adopted in Sydney by the Commonwealth Bank, GPT, Goodman and Macquarie Bank.

The Colliers International 2012 Office Tenant Survey: Alternative Workspace Strategies found about a quarter of Melbourne tenants/employers were considering hot desking as an option, with larger companies on long-term leases the most likely to consider it.

But while activity-based working offices may see a significant reduction in floor space (and therefore rents), switching to the model does not necessarily return cost savings on the same order.

So far, there has been no research to indicate how much ABW fitouts typically cost or the savings that are delivered. Anecdotally, industry operators say they can require expensive, high-tech IT and telecommunications systems to ensure workstations meet the potential needs of any employee.

The model has also met with a mixed reception from employees, who have struggled with the lack of privacy, competition for spots, and uncertainty caused by a constantly changing work and social environment.

"Ratings of staff satisfaction are typically improved, but there is a question mark around the extent to which ABW truly fosters cross-group collaboration or enhances personal productivity," said Colliers International's director of consulting David McEwen.

Go to Google News, then click "Follow" button to add us.

Share this article and show your support

Frequently Asked Questions about this Article…

What is hot desking (activity-based working) and how does it work?

Hot desking, also called activity-based working (ABW), replaces assigned desks with standardised workstations that any employee can use temporarily. The idea is to eliminate 'wasted' space left by staff on different shifts, leave or trips, by refitting offices so desks are shared rather than permanently assigned.

Which major Australian companies have adopted hot desking?

Several high-profile Australian firms have moved toward hot desking, including Suncorp, BHP, ANZ and NAB. The model has also been adopted in Sydney by Commonwealth Bank, GPT, Goodman and Macquarie Bank, according to the article.

How much office space can hot desking save and what does that mean for rents?

Industry advice cited in the article (Knight Frank) says activity-based working can shrink the floor space a business needs by around 30 per cent. Less floor space can mean lower rents, but the article notes floor-space reductions don’t always translate into equivalent cost savings overall.

Will switching to hot desking deliver immediate cost savings for companies and investors?

Not necessarily. While ABW can reduce required floor space (and potentially rents), the article says there’s no solid research on typical ABW fitout costs or exact savings. Fitouts may require expensive, high-tech IT and telecommunications upgrades, which can offset some savings.

How do employees generally respond to hot desking and ABW offices?

Employee reaction is mixed. Some measures of staff satisfaction often improve, but workers can struggle with lack of privacy, competition for workstations and uncertainty from a constantly changing work environment. There’s also debate about whether ABW truly boosts cross-team collaboration or personal productivity.

Is hot desking a global trend or mainly local to Australia?

Hot desking has been used for several years in the US and Europe and is now gaining traction in Australia. A Colliers International survey found about a quarter of Melbourne tenants were considering hot desking, with larger companies on long-term leases most likely to adopt it.

What kinds of buildings or facilities best support hot desking?

According to Knight Frank’s state leasing director quoted in the article, activity-based working can be used on almost any floor plate, but it requires a good-quality building with strong services to support the new workplace model. Adequate IT and telecommunications are also important.

What should everyday investors watch for when companies move to hot desking?

Investors should note that widespread ABW adoption can change demand for office space—companies may need less floor area and could delay taking extra space during expansions. However, cost outcomes are uncertain because of fitout and IT expenses. Keep an eye on leasing trends, building quality requirements and how tenants’ space needs evolve.