EXPLORING THE UNIQUE CRITERIA DRIVING THE

CORPORATE IDENTITY AND WORKPLACE OF THE FUTURE

MAY 2016

THE WORKPLACE FINGERPRINT

[ OFFICE ]

[ PLACE ]

[ DISRUPTION ]

[ COLLABORATION ]

[ AMENITY ]

2 THE WORKPLACE FINGERPRINT

THE WORKPLACE FINGERPRINT 3

THE RESEARCH

IN SUMMARY

> The increasingly rapid impact of technology is changing the way organisations function, how their people work and the places in which they do business.

> True leadership will foresee anticipated trends and workplaces will look and operate differently to facilitate the productivity of a future which is focused on knowledge workers.

> Modern business is acutely aware of the need to be adaptive, agile and flexible and to remain relevant to key stakeholders to survive.

> Commercial real estate landlords will need to move to a more proactive management approach that embeds deep, durable and flexible relationships with tenants, delivering focused and customer-centric solutions.

> Latest research has uncovered a unique set of criteria, or ‘fingerprints’, that underpin an organisation’s approach to activity, people and workplace over the next five to ten years.

To accommodate an evolving economy, the workforce of today must become increasingly agile and collaborative. The latest research undertaken by AMP Capital, in collaboration with CBRE and Two Blind Mice, has revealed the major trends influencing business and the factors organisations consider when looking for office space in this changing environment.

We surveyed more than 30 leaders and influencers from Australia and around the world, across a range of knowledge-working sectors, including financial services, investment banking, law, professional services and technology. Among their feedback, one significant issue stood out - modern business is acutely aware of the need to adapt, be agile and flexible, and to remain relevant to key stakeholders to survive. As a result, these organisations are actively embracing new ways of working to both fully empower their workforces and de-risk their future.

Our research has identified that with this changing world of work, and the readiness of organisations to adapt, an evolution in property services is needed, responding to increased demand for customised solutions that are business and industry specific as well as customer-centric.

Adaptable, agile and flexible organisations understand that business as usual is about the future, identifying new approaches to the management of workforce and workplace, recognising that:

> collaborative and globally networked knowledge workers are a source of competitive advantage that allow organisations to harness the power of fresh and creative insights made possible through technology;

> workplace strategy and design are concepts that companies are already embracing with dedicated teams committed to future-casting their work practices into the next ten years; and

> the motivation for this approach is not sentimental. Rather, organisations are looking at these concepts as a matter of ensuring their own survival and prosperity in the years to come.

4 THE WORKPLACE FINGERPRINT

THE FINGERPRINT OF FUTURE WORKPLACESOur research found that as organisations recognise that distinctive and customised business solutions become the new normal, the landlord/tenant relationship will pivot on the ability to meet the unique workplace criteria of each organisation or sector – its fingerprint. Our research has identified a set of 25 pragmatic considerations that underpin each organisation’s approach to activity, people and workplace over the next five to ten years.

From the landlord’s perspective, a deep understanding of these fingerprints will assist in tailoring the tenant experience and ensure the customised solutions mentioned above are delivered, and that durable landlord/tenant relationships are fostered.

24/7

OFFSHORING& OUTSOURCING

MOVE TODIGITAL

BROADENINGCAPABILITIES

CONTINUEDSTAFF

TRAININGVARIABLE

COSTS

MORE STAFFIN LESS SPACE

TOTALCONNECTIVITY

DATAIS KING

WELLNESS

OPEN PLANPLUS

HOTELSERVICE

PROJECTBASED WORK

ACTIVITYBASED WORK

DEDICATEDCLIENT AREAS

COLLABORATIVE& CREATIVE

WORKSPACES

FLEXIBILITY

CONTINUALDISRUPTION

WORKPLACECULTURE

DEVELOPMENT HUMANCAPITAL

CLIENTALIGNMENT

PRESERVATIONOF THE BRAND

INCREASEDSERVICE

STANDARDS

FACE TOFACE

CONTACT

PROVIDEDSERVICE &AMENITIES

LEGAL

FINANCE

TECHNOLOGY

CONSULTING

BRAND

The following diagram outlines the fingerprints for knowledge-based work organisations and how they see the important priorities shaping the way they think about the future of work. The top ten fingerprint considerations are featured on page 7 in greater detail, while a listing of the full 25 factors is provided on page 11.

THE WORKPLACE FINGERPRINT 5

NO TWO FINGERPRINTS ARE THE SAME…BUT THEY CAN BE SIMILARWhile every business surveyed had its own unique fingerprint, it was observed that organisations operating in the same industry sector had similar fingerprints, that is, they shared similar priorities and requirements of their teams and workplaces.

For example, all industry sectors that were surveyed placed an understandable focus on the ability to access project-based work areas (for some, often at a moment’s notice) as well as having access to human capital. In both cases, this reinforced the critical part played by the workplace and its amenities in fostering innovation through collaboration, while importantly also assisting in retaining talent.

For the finance and legal sectors, brand preservation was identified as critical, not only within their ‘place’ and for their teams, but importantly for their customer/client base. This shines a focus on the specialist amenities and workplace configurations the landlord will need to provide in servicing this sector.

At the same time, the diagram opposite also identifies those areas where knowledge-worker sectors have both similar and divergent needs, highlighting the rich understanding of tenant needs landlords will require in curating the environments in which their tenants will thrive.

While the hierarchy of priorities were aligned with different sectors and industry groups, there was nonetheless a remarkable consistency across the top ten priorities identified, that is, those experiences or facilities required for business’ and their workers to perform at their best.

An understanding of these factors is critical in order for landlords and tenants to effectively collaborate and create the environments and experiences that make both the knowledge worker and the places from which they work, productive.

6 THE WORKPLACE FINGERPRINT

TOP 10 WORKPLACE CONSIDERATIONS

THE WORKPLACE FINGERPRINT 7

1. A FLEXIBLE FUTURE

Flexibility is the top priority for business, recognising the desire to de-risk tenancies and the notion that a one-size-fits-all approach is no longer practical. The ‘set and forget’ era has been replaced by the competitive necessity to ‘set and reset’, where flexibility penetrates the entire tenant/landlord relationship, requiring a strong focus on length of lease and more flexible leasing models, fluid floor plans, customisable fit-outs and scalable design.

With this in place, tenants feel empowered to be positive and constructive disruptors, confident that they have the ability to flex, adapt and evolve as their unique business circumstances demand.

2. CHANGE – THE NEW NORMAL

With change happening at unprecedented speed, companies are grappling with how to integrate continual disruption into corporate culture. Organisations can no longer allow themselves to simply ‘coast’, and in their view, neither should landlords. The consensus formed from the study participants is that market evolution should also be a learning exercise for the landlord. In this environment, solutions-based and visionary landlords who can work in conjunction with their tenants to find customisable win/win solutions would prevail.

3. A SENSE OF PLACE

The freedom to work anywhere at any time and be globally connected, creates broad-based opportunities for collaboration. However, in parallel to the virtual world of the cloud, organisations place high importance on having a bricks and mortar base to create a sense of place and belonging for their people. Ultimately, companies want to create a workplace that fosters meaning. This involves providing a workplace that exceeds workers’ expectations, creates a strong, appealing culture and thereby attracts talent. And it’s not just about the workplace. The facilities, amenities and lifestyle experiences that the landlord is able to provide and curate, will become attractors for knowledge-based workers and therefore, their employees.

4. PEOPLE FIRST

With business seeing a shift from an era of sustained stability to one of sustained volatility, the make-up of the workforce and how that workforce can be best accommodated is being reassessed. This is being done by exploring, experimenting with and implementing different work patterns and styles, as well as how inter and intra company collaboration occurs.

Rather than just focus on work/life balance, organisations now think it’s more about a merger of work and life, where health, wellbeing and social networks are part of a broader, seamlessly connected environment with people at its core.

5. A TWO-WAY STREET

Crucial to business success is deep engagement with clients and alignment to their needs and strategies. In turn, landlords must address the changing nature of business and provide innovative and flexible solutions that enhance the service experience. Since many companies are conscious of the pace of change and are reluctant to plan beyond five to ten years, landlords who are seen to be proactive in workplace planning, as well as providing thought leadership, are seen as critical. This is equally true for the physical requirements and behavioural outcomes of the workplace of the future.

6. WE STILL WANT TO IMPRESS

For many organisations there is a need to impress clients with views, amenity and architecture, delivering on prestige and success. Some corporate organisations also have a desire for discretion and dedicated client meeting and reception rooms. In many instances, organisations are looking for differentiation from their competitors, and the broader context outside their designated areas, such as the precinct itself and other facilities within the building, need to be equally inspiring. A premium precinct that delivers on status, backed up by high service standards, appeals to tenants when it comes to long-term partnership.

7. INNOVATION AT THE HEART

The twin themes of collaboration and creativity are distinct in future workplace planning with a strong understanding that innovation needs to remain at the business core, and cannot be offshored. Innovation is considered the by-product of collaborative, non-linear thinking and provides a context of creativity which fosters the ability to challenge norms and remain responsive, in order to stay competitive and deliver on current and future client needs.

8. HUMAN CONNECTION

There is a strong awareness of the continued value of face-to-face communication and that innovation and creative thinking come from direct human interaction. Technology is regarded as an enabler, not a replacement for contact. However, organisations do not anticpate a rise in headcount in the next five to ten years and hence floor space requirements, although the percentage of contingent workers could grow. With this comes the importance of quiet, co-working, collaborative and breakout style spaces, with a continued trend for restaurants and cafes becoming informal meeting and business places.

9. A WINNING RELATIONSHIP

Moving the bar even higher from more traditional client alignment, there is an increasing desire to get even closer to clients through direct, engaged relationships in order to win and retain business. Organisations are looking for greater client relationships beyond the functional, and a workplace destination with world-class restaurants, hotels and facilities support this ambition.

10. BRAND CONTROL

While organisations want an office building to provide the wow factor they also want it to be an experience complementary to their own brand rather than dominant. The right building provides a key competitive advantage, particularly when this synergy of approach between building and brand is achieved. On a practical level, collaborative, shared areas and user-pays models for third spaces are welcomed as cost-efficient, however control over the brand experience must be retained.

8 THE WORKPLACE FINGERPRINT

WHAT DOES THIS RESEARCH TELL US ABOUT THE FUTURE?

PREPARING FOR CHANGE

Tenants are well down the path of preparing themselves for the future of work, and have a healthy appetite for change. What’s driving this is the recognition that if they don’t adapt and change, then their relevance as an employer and an attractor of talent will diminish.

There is some bandwidth in the approaches taken, with the consulting, law and technology firms asserting themselves as being more experimental in their outlook and the more conservative and risk adverse businesses, including investment banking and financial services, methodically working their way through legacy work practices and carefully assessing the benefits and impacts of change.

VISION

Previously, companies reflected on their landlords as being mostly passive and reactionary. In the future, organisations will want to partner with proactive landlords that are leaders in their field, helping to leverage opportunities and de-risk the challenges as much as is reasonable. Tenants want their landlords to be visionary and think well beyond floor space and market rates to build in flexibility and innovative ways to occupy short term space to accommodate anticipated variability in workloads and headcount.

While tenants recognise and factor-in that connection and collaboration are now possible via constantly improving technology, they still acknowledge that it will be inspirational and vibrant places and precincts that will pull people from the cloud to the ground. This view is widely held and has far-reaching implications, including:

> the way leases are structured;

> the quality of services and amenities that landlords provide for tenants; and

> the experiences offered to building tenants and their guests.

TENANTS ARE SOPHISTICATED AND KNOW WHAT THEY WANT

Of itself, the best commercial tower in the country offering efficient floor plates or state-of-the-art technology will be unlikely to meet the longer term requirements of the tenant. The organisations interviewed expressed a strong desire for their building and the precinct in which it is situated to be activated. They want landlords to drive a precinct story for their staff and their clients, and the story is that the building and the precinct has ‘soul’.

Companies want to reside in well-designed buildings that account for their needs, in activated precincts that carry a very strong sense of place including entertainment offerings, night-time activation, improved public transport links, incorporated taxi ranks, accommodation options and retail opportunities offering unique experiences to complement the modern workplace as well as the extended hours now being worked.

Companies are also very conscious of preserving their own brand and not losing the key elements of their culture as work practices become more fluid and spaces become more collaborative. Despite the advancement of technological enablement, companies still place a very high value on face-to-face contact in collaborative, social and creative spaces. They are looking to make the workplace a cultural incubator that entices staff to want to come to work and stay. They are looking for buildings to help foster this culture through clever design and bespoke spaces that can be easily adapted when required.

NO SUBSTITUTE FOR FACE TIME

Despite the advancement of technology enabling new ways of working, including remotely through mobile devices and cloud based platforms, companies continue to place a very high value on face-to-face contact. They recognise that innovation and creativity is sparked in collaborative, social and creative spaces and that new technology and work practices are enablers of more meaningful workplace relationships, not substitutes for them.

THE WORKPLACE FINGERPRINT 9

COMMUNITY

Driving a feeling of community will be essential in bringing the workplace to life and encouraging tenants to stay for many years to come.

The organisations surveyed expressed a strong desire for landlords to create and curate their facilities so that they become an ecosystem of like-minded organisations and individuals, not an amalgamation of disparate entities only interested in their own little part of the building or precinct.

To achieve this, practical suggestions included heightened security, state-of-the-art auditorium facilities, seamless technology solutions that can adapt as required, high quality end-of-trip facilities, technology-enabled car parking options as well as fine dining and leisure options on the upper levels of facilities where tenants can enjoy views. These must all be delivered with a dedicated, generous and genuine service ethos by real people who are experts in their field.

CONCLUSION

The fingerprint organisations interviewed are looking for a more meaningful and longer term relationship with the landlord and this strongly aligns with their own ethos recognising that client engagement is the key battleground. If organisations have to align with their clients then it stands to reason that landlords should align with their tenants, especially where tenants establish a long term lease agreement in premier precincts as a means of enticing clients to do business there.

In order to deliver the workplace of 2030, the research undertaken with CBRE and Two Blind Mice demonstrated that landlords must evolve from being reactive to proactive, and this means moving relationships beyond the one-off deal to a long-term, meaningful partnership that enables premier precincts to become an eco-system of like-minded organisations and individuals.

Essentially, the fingerprint organisations want landlords to be leaders who:

> think ahead and navigate critical challenges faced by tenants and landlords with a shared interest, namely, to ensure that the ‘places of workplaces’ remain productive and flexible in order to accommodate business cycles and new ways of working into the future;

> de-risk tenancies and deliver flexibility for tenants, recognising that leases are not ‘one-size-fits-all’;

> deliver precincts founded on the principles of human and building wellness, in order to foster client and employee engagement and experience with place;

> create tactile, real precincts that nurture collaborative, social, thinking and technology-enabled workplaces that bring the best out in people, in order to create new opportunities and deliver enhanced value for clients;

> recognise that change is certain and that as a result, buildings and space utilisation arrangements will need to become as flexible as possible to evolve with tenants who are managing an ever-changing workforce and workplace;

> appreciate that some organisations have a preference for handing under-utilised floor space back to the landlord, rather than managing sub-leasing themselves but are willing to pay for additional space ‘at call’;

> understand the importance of seamless state-of-the-art technology throughout the building/precinct for the benefit of tenants and guests regardless of the device being used;

> have a strong service-based customer ethos for complementary precinct services that operate for extended hours to meet the current requirements of business, curated by generous and genuine people who are experts in their field; and

> can provide shared tenant facilities, professionally managed and available on demand, including large spaces that can accommodate the teams of an entire organisation in a single venue.

10 THE WORKPLACE FINGERPRINT

THE 25 FACTORS OF THE WORKPLACE FINGERPRINT

THE WORKPLACE FINGERPRINT 11

FLEXIBILITY: Tenants are looking to landlords to build flexibility into almost every aspect of the future workplace for leasing models and occupancy costs.

WELLNESS: Considered a must-have for the future workplace.

CONTINUAL DISRUPTION: Tenants want landlords to play a much more proactive and partnership role in future workplace.

PROVIDED SERVICE AND AMENITIES: Tenants expect landlords to partner with best in class experts to curate and deliver end-of-trip and wellness facilities, concierge, food and beverage.

WORKPLACE CULTURE DEVELOPMENT: Companies want to foster a workplace culture that creates meaning for staff.

HOTEL SERVICE: Must be genuinely delivered to high standard.

HUMAN CAPITAL: Building services and amenities will play an ever-increasing role in attracting and retaining talent.

DATA IS KING: Measuring performance real time will become more commonplace.

CLIENT ALIGNMENT: Maintaining client engagement is key.

TOTAL CONNECTIVITY: Need for staff to feel at home with technology and leased premises must keep pace with technology.

DEDICATED CLIENT AREAS: Some businesses want to maintain the brand experience for clients and client confidentiality but see the appeal of reducing floor space costs.

MOVE TO DIGITAL: Drive towards the paperless office.

COLLABORATIVE AND CREATIVE WORKSPACES: The twin themes of collaboration and creativity are distinct in future workplace planning.

24/7: Buildings need to operate around the clock in order to accommodate and access global knowledge workers and align to client needs.

FACE-TO-FACE CONTACT: Formal and informal meeting areas will always play a vital role.

OPEN PLAN PLUS: A desire for large, efficient floor plates to provide maximum flexibility.

INCREASED SERVICE STANDARDS: Businesses are looking for ‘angles’ for greater client engagement as distinctive competitive differences.

MORE STAFF IN LESS SPACE: Companies are mindful of getting more work done in less space whilst enhancing staff comfort.

PRESERVATION OF THE BRAND: The environment must complement their own brand experience.

VARIABLE COSTS: Companies are keen to reduce costs and don’t want to pay for what they don’t use.

ACTIVITY-BASED WORK: Although not for everyone it is an increasing trend that companies will adopt to some degree in the future.

BROADENING CAPABILITIES: As businesses diversify to look for new revenue streams they need to be able to acquire more space easily from the landlord.

PROJECT-BASED WORK: Increasingly, additional floor space is needing to be sourced quickly for periods of time, preferably close to their premises.

OFFSHORING AND OUTSOURCING: With the increase in offshoring and outsourcing, core CBD based staff levels not expected to increase in the next five to ten years.

CONTINUED STAFF TRAINING: Strong role in staff retention and acquisition, and sound business strategy.

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5 18

9 22

3 16

7 20

11 24

2 15

6 19

10 23

4 17

8 21

12 25

13

BRAND

Important notice: While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) (collectively, AMP Capital) make no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. The document may contain projections, forecasts, targeted returns, illustrative returns, estimates, objectives, beliefs, back-testing, hypothetical returns, simulated results, non-actual and similar information (Non Actual Information). Non Actual Information is provided for illustrative purposes only and is not intended to serve, and must not be relied upon as a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual circumstances are beyond the control of AMP Capital. Some important factors that could cause actual results to differ materially from those in any Non Actual Information include changes in domestic and foreign business, market, financial, interest rate, political and legal conditions. Various considerations and risk factors related to an investment described in this document. There can be no assurance that any particular Non Actual Information will be realised. The performance of any investment or product may be materially different to the Non Actual Information. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided.

CONTACT US

For further details on Australian, New Zealand and international real estate markets www.ampcapital.com

LISA BOWMAN Communications Manager AMP Capital T: + +61 (0)402 786 641 E: lisa.bowman@ampcapital.com

LINO CACCAVO Divisional Development Manager AMP Capital T: +61 (0)411 660 007 E: lino.caccavo@ampcapital.com