Perspectives a Daiichi Properties Publication on Ideas + the Built Environment

perspectives A Daiichi Properties Publication on Ideas + the Built Environment

4TH QUARTER 2015

THE OFFICE brew

DAIICHIPROPERTIES.COM | 1 perspectives \pәr-'spek-tivs\

noun 1. The art of drawing solid objects on a two-dimensional surface;

2. An understanding of how aspects of a subject relate to each other and to the whole;

3. A point of view. daiichiproperties

This publication has been prepared solely for information purposes. It does not intend to be a comprehensive description of the ideas contained in it. The materials on which this publication is based on have been obtained from current public information that we consider reliable, but we do not represent it as accurate or complete, and it should not be relied on as such. No part of this publication may be (i) copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior consent of Daiichi Properties, Inc.

2 | PERSPECTIVES Gone are the days of physically having

The changing concept to clock in and out of work will lead to new hybrid spaces and business models in a digital of the office. and competitive global economy. Real estate developers must lead the change or fall behind.

In less than a decade, the concept of work has advanced significantly to keep up with an increasingly competitive global economy. This evolution of work could be attributed to several defining developments that occurred in the past half-century. The significant shift in the employment of manual to knowledge workers, the demographics entering today’s workforce, and the rapid advancement of technology have influenced where work is executed. The beginning of the twentieth century brought about the industrial revolution and an upsurge of manual laborers. The dawn of the computer age in the 1980s, on the other hand, generated the need for knowledge work due to businesses wanting to take full advantage of the newly made available technology. Knowledge workers have since grown exponentially in developed and developing countries. By its very definition, knowledge work is both individualistic and social. These workers need to be given time on their own to focus and develop ideas but the information must be shared and improved with colleagues for it to become beneficial to the organization. Their rise strengthened the concept of collaboration as a way to work, and some would strongly ar- gue, the only way to work. Knowledge-based companies rely on the creation of ideas, making it necessary for employees to frequently collaborate with one another to cultivate innovation and creativity.

4 | PERSPECTIVES DAIICHIPROPERTIES.COM | 5 EVOLUTION OF THE WORKPLACE

The nature of work is in an age working-age people in the United will pressure companies to rethink of, essentially progressive, change States and are expected to repre- and revamp how work is done. WHAT and creation. The emergence of sent half of the global labor force The worker’s ability to be mo- start-ups that let users monetize by 2020. This new generation in bile is enabled by the available People used Services rather than their assets and knowledge such the workforce is demanding a technology. Technology’s disrup- as Uber, Airbnb, and Alibaba cre- more urban and mobile approach tion in the workplace has changed manufacturing as a greater share of GDP ated opportunities that led to the to the current workplace set-up. work patterns. Work used to be to go to work, rise of the entrepreneurial class. Millennials’ desire for a flexible more linear. Accomplishing indi- The landscape of today’s work- approach to working has led to vidual tasks and interacting with Knowledge-based work force has significantly shifted. them viewing entrepreneurship coworkers stayed within the four now work goes According to the American Office and freelance jobs as opportuni- walls of the office but the demand of National Statistics, nearly ties to work away from rigid cor- for immediate and regular col- 4.1 million workers were self-em- porate structures, or to work for laboration and mobility – inside to people. ployed in 2014 and millions of innovative and forward-thinking and outside the workplace – has others accredited their income to companies that allow for flexible compelled businesses to react WHO freelance work. The enrichment work-schedules. Their refusal to immediately to technological and flexibility that comes with be- be deskbound is a change from the changes. The workplace is becom- The emergence of ing self-employed have compelled attitudes of the rest of the genera- ing increasingly fast-paced and start-ups created many workers to leave their desk tions present in the workplace. complex, which means companies opportunities that led jobs and venture onto entrepre- Companies now have to under- must ensure they invest in tech- Rise of Millennials to the growing number neurship. The surge of entrepre- stand the new multi-generational nology that empowers workers in the workforce of entrepreneurs neurs is reinforcing a global trend labor force in order for them to with collaboration rather than of redefining the concept of work. properly accommodate the differ- fostering isolation, to compete The creation of these new busi- ent working styles existing in the effectively. nesses and start-ups could as well office, offering both opportunities Today’s up-and-coming gener- HOW be ascribed to the demographic and challenges. The shift away ation of workers meet, share, and of the changing workforce. Mil- from traditional career paths (long get work done via technology— lennials comprise one-third of all tenures at the same company and and they expect the technology lifetime-lasting careers), and work tools they have embraced in their Improved software values (loyalty and work ethic), will personal lives to play an important applications accelerate in the coming years as part in their business lives, as well. the age differences in the work- People used to go to work, now Advancements of force become more pronounced. work goes to people. Organiza- WHERE hardware All these trends in the population tions are gradually undertaking

Conference rooms are rarely used to capacity Technology’s Disruption of the Workplace Desks are unoccupied 62% of CLOUD COMPUTING Virtual Reality Virtual Conferences 3D Printing Mobile Applications An internet-based system for Enables users to interact Empowers the interaction of The process of synthesizing These applications have the the time employees to work flexibly with a computer-generated workers based in different three-dimensional solid capability to improve everyday and connect from anywhere, simulation of a three- locations - sharing a common objects from a digital file. It business functions and overall everywhere that involves dimensional image or virtual environment on the has the potential to impact productivity that range from the delivery of information environment. It replicates web – to communicate and production lines and allow note-taking apps and mobile technology services via a physical presence and hold face-to-face meetings the fast building of prototypes office suites, to calendars, centralized data storage and artificially creates sensory without having to move to a and models. It moves us timers and to-do lists. online access to a shared pool experiences, which can single location. away from the Henry Ford Majority of workers from of computer servers. include sight, hearing, touch, era mass production line, and OUT OF OFFICE di erent industries surveyed and smell. will bring us to a new reality Private oces are unoccupied say that they want to work of customizable, one-off one or two days a week away production. more than 75% of the time from the oce

6 | PERSPECTIVES DAIICHIPROPERTIES.COM | 7 the entire building – including the other tenants present – as the workplace. The proximity and The desk is no longer the availability of retail spaces inside and around the office building has sole place to work, but part become an asset in leasing. Gensler remarks that another big shift is that office buildings will of a larger ecosystem of become less of a stand-alone real estate product and more a part of where work is done a mixed-use community. City plan- ners can make use of the workers’ need for alternative spaces to fur- ther develop their communities. Strategically placing retail spaces that promote informal interaction and collaboration beside commercial office buildings will generate high retail traffic during the work- day. Providing these alternate workplaces is the variety the present workforce is looking for, allow- ing for casual collisions and chance encounters. Pairing work with steps to address the needs of in-person meetings should be other collaborative spaces gives workers by incorporating different accessible to them. Videoconfer- workers room for more innovation technologies inside the workplace. encing allows knowledge workers and creativity to occur. The introduction of greater mo- to have face-to-face connections Seeing as how work is no longer bility within the office via wireless with one another – making virtual limited to the office, this can cre- connection networks and LTE al- interactions more personal and ate some interesting challenges lowed workers to not just remain efficient. for real estate developers and in their designated desks but also As the concept of work is con- companies to remain competitive to do work in other parts of the stantly redefining thewhat, how, in the years to come, with some office. The emergence of telecom- and who, eventually where the pundits asking the question muting or doing work independent work is done changes in a com- from the office is possible because pany’s office space, building, and of the evolution of cloud-comput- community. The desk is no longer Is office ing. Knowledge workers are now the sole place to work, but part of able to access from wherever they a larger ecosystem of where work space still are the data they need, as they is done. need it. Real estate developers must relevant? As businesses hasten to be constantly adapt and transform more innovative and global, the the commercial office building talent and skill of their knowledge model to cater to the needs and workers become more important. demands of the tenants to attract Many collaborative teams now and provide for a younger, more consist of people dispersed all creative and collaborative work- over the world to bring in diverse force. In the workplace surveys perspectives to the organization. published by Gensler, a leading In order for these teams to ef- collaborative design firm that fectively collaborate, real-time continually studies the future of communication and collaboration the workplace, it was noted that technology that creates virtual clients are starting to consider

8 | PERSPECTIVES DAIICHIPROPERTIES.COM | 9 THE PHILIPPINES IN CONTEXT business As the Philippines increasingly try has successfully challenged process becomes part of the global supply India for the past two decades. outsourcing chain of goods and services, the The IT-BPO industry employs the trends in the evolution of work greatest share of workers and has are impacting the local market. become a large contributor to the The Philippines is currently expe- country’s Gross Domestic Product projected to employ riencing an economic renaissance (GDP). With more than one million over the past few years, ranking Filipinos working in the IT-BPO 1.3 million it as one of the most improved industry, its contribution to the workers countries according to the World economy is expected to overtake by 2016 Economic Forum. Companies the total amount of Overseas Fili- from across the globe are taking pino Workers’ (OFWs) remittanc- advantage of the strong econom- es, currently estimated at 10% ic fundamentals and favorable of GDP. Overall, it is projected to demographics of the country employ 1.3 million skilled workers 17% with companies like IBM, H&M, by 2016, with a 17% compounded annual growth Google, Uniqlo, and Unilever ex- annual growth in the years ahead. panding their business operations Attracted by a growing middle in major cities. The shift from class with rising incomes and an manufacturing to service-based urbanizing population, many mul- and knowledge-intensive work, tinational companies have set up Average age the rise of Filipino young profes- operations throughout the coun- 25 years old sionals and entrepreneurs, and the try. Driving through some business digitization of work are changing districts highlights the impressive the behaviour of where Filipinos growth the country has achieved, accomplish work. with recognizable global brand Projected to Similar to the experience of names on billboards and buildings. generate other developing countries, the The trend will continue as the Philippines’ manufacturing and current program of privatizing 1.3 million agriculture sectors have been economic and social infrastructure new jobs declining slowly for the past three continues to gain local and foreign decades, with the pattern of eco- interest. It is expected that infra- nomic growth now characterized structure investments will create by the increase of the service high-quality transport networks $25 billion sector. A large component of for roads, ports, and airports, as in revenues this sector is the development of well as for power generation and the Information Technology and transmission, which are essential in 2016 Business Process Outsourcing for boosting growth across all (IT-BPO) industry, which the coun- sectors.

10 | PERSPECTIVES DAIICHIPROPERTIES.COM | 11 TOTAL POPULATION*

255,993,674

94,348,835 100,998,376

VIETNAM INDONESIA PHILIPPINES

*July 2015 est.

MEDIAN AGE 29.6 29.6

23.2 Companies and investors are in 2015 already accounts for 67% resulting in the sustained growth various traditional sectors. Since last place in 2011 to tenth in 2015. often lured to the VIP countries of the total population. of the middle-class population. then, more incubators and compe- Looking to improve margins and to - Vietnam, Indonesia, and the With the demographic window A global consensus is emerging titions have been established, with increase flexibility, companies are Philippines - by their demographic beginning in 2015, both local and that entrepreneurship is a key more start-up workshops and ses- quickly adopting cloud computing. promise, and by their fast-grow- multinational companies have to strategy for economic growth and sions for networking and knowl- This change fuels the workers’ ing population of workers and prepare for the rising number of development. As silicon valleys and edge-transfer opportunities. growing demand for technology, consumers. Likewise, the worry millennials joining the workforce. alleys sprout in almost every major The role of technology has while mobility is changing where in China is that it will grow old As the product of the technolog- city, region and country, there is played a major role in the prolifer- work is done. before it grows rich. Demograph- ical age, this new generation of an opportunity for countries to ation of entrepreneurs, enabling Spaces outside of traditional VIETNAM INDONESIA PHILIPPINES ics are not destiny, but they are Filipino workers differ from other leapfrog traditional development them to work anytime, anywhere. corporate structures are being a noteworthy determinant of generations because of how adept stages. By dramatically enhancing Fortunately, the Philippines has used, at times, as substitutes for economic potential. A third of the and dependent they are on tech- productivity and fundamentally become one of Southeast Asia’s the office desk. In any major city, Philippines’ population belongs nology. Surveys that generalize remaking the economic landscape, most promising technology mar- the cafés and restaurants are actu- to the millennial generation with this important demographic show entrepreneurship is regarded as kets. The internet penetration ally the unofficial meeting rooms percentage of population half the household younger than that millennials do not have the an instrument to alleviate poverty rate is nearly 40% with 81% of the of the business community. The 23, making it one of the youngest same traditional work ethic of and to promote inclusive growth, entire internet audience labelled standard coffee shop is becoming aged 15-64 in Asia. Compared to its Southeast earlier generations. They want the especially in the Philippines. as millennials under 35 years old. a hub for employees and entrepre- 70.0% Asian neighbours Thailand, Malay- workplace to be more social and In 2012, two telecommuni- Between 2008 and 2012, internet neurs who wish to work and col- 67.5% sia, Indonesia, and Singapore, the to emulate their personal lives. cation companies set up the penetration in the country grew laborate with their colleagues in 61.7% country has achieved an enviable Key desires for this generation of country’s first incubators – orga- by nearly 500%. Over that period, an informal but energized setting. status in terms of demographics. employees are having a flexible nizations that foster start-ups – to device ownership and usage of With the what, who, and how of Through 2050, the country is said work schedule and technology help grow the technology and virtually all online services grew work continually evolving, where to be within the “demographic that enables mobility. With the entrepreneurship sectors. Smart dramatically. work is done will transform and window,” loosely defined as a increasing employment opportu- Communications founded the The country’s cloud-readiness challenge how the future office period when a majority of the nities presented by multinational non-profit IdeaSpace, while Globe – the assessment of systems and will look like. people are of working age or those corporations and the IT-BPO in- Telecom Inc. started Kickstart processes for the adoption and between 15 and 64 years old. dustry, the local labor pool is now Ventures. These incubators are secure use of cloud computing Based on official projections, the being filled with college-educated providing Filipino start-ups the services - climbed four spots from VIETNAM INDONESIA PHILIPPINES country’s working-age population and English-speaking millennials opportunities to seize and disrupt

SOURCE: CIA: The World Factbook the world bank: world development indicators

12 | PERSPECTIVES DAIICHIPROPERTIES.COM | 13 Cheapest Rent may require a fresh perspective in Town which can only be solved by being away from your desk. The use of For over three centuries, coffee coffee-shops as an office space shops stood as centers of inter- will continue in the years to come action and knowledge. It was a as millennials enter the workforce communal space for scientists, in significant numbers, and as en- philosophers, literary minds, and trepreneurship becomes a more businessmen who gathered to viable career option. discuss and debate ideas, trends, In the Philippines, the affinity and innovations – all for the price for coffee is quite strong, with the of a cup of coffee. The traditional domestic consumption averaging coffee-shop that began in 17th cen- ten times higher than production tury England was a social outlet levels. In 2012, the International much like it still is today globally. Coffee Organization noted that But with the advent of wireless in- the country’s total coffee con- ternet access and the evolution of sumption reached an estimated work, the role and character of a 2.2 million bags and has been coffee-shop increasingly becomes increasing significantly in recent more like an office cubicle, or at years. Although most Filipinos still least an extension of the office – a prefer buying instant coffee mixes, public space to do work. foreign and home-grown coffee An office cubicle no longer shops are expected to gain an holds a monopoly on where work even stronger following because is done. The development of Wi- of the Philippines’ rising middle Fi technology has allowed coffee class and changing palates. As one shops to go beyond just serving of Asia’s top coffee consumers, beverages to mobile professionals with 250 cups of coffee consumed and entrepreneurs, but providing a every second, the number of in- business hub for holding informal ternational coffee shops opening meetings, dining clients, or putting in all major cities are steadily on in a full day of work. According to the rise. CoreNet Global, the world’s lead- The success of the country’s ing association for corporate real coffee-shop business is accred- estate and workplace profession- ited as well to the different als, approximately 26% of the total work schedules of the IT-BPO global work force of three billion employees, working for various people are already working away time-zones for companies around from their offices at least twice the world. Coffee shops extended a week. Through 2020, studies their operating hours, with most reveal that work away from the of- operating 24 hours, to serve the fice is set to grow beyond 40%. million-strong IT-BPO workforce The attraction of a coffee-shop whose late-night shifts are being as a ‘coffice’ can be summed up as fuelled by caffeinated beverages. providing the key characteristics This 24-hour corporate culture of convenience, community, col- has dramatically changed the laboration, and creativity. While working habits and lifestyles of its the office is a useful place to employees, in Metro Manila and a sampling of the coffee brands in the philippines pool ideas and resources, sitting other central business districts, at the same desk every day to and will continue to shape the real tackle complex problems seen in estate landscape over the coming knowledge-intensive industries, years.

14 | PERSPECTIVES DAIICHIPROPERTIES.COM | 15 An Evolving Office Building

Despite the adoption of coffee-shops as viable places to work, public spaces which may offer convenience, community, collaboration, and creativity will never be a formidable competitor to the traditional office space. Privacy and office(second space), enables for the prolifer- in the technology sector, allocations for ameni- these spaces are even fitted out with designer white-boarding are quite limited, as well as ation of the third space, like coffee shops and ties are as high as 12% at large companies, and furniture and modern art. Overall, the design the level of collaboration. Several studies still other social hubs in the community, influencing are even larger at smaller companies. Bringing of the coworking spaces aims to achieve the note that the actual presence inside the office Innovative and the development of hybrid offices and new the coffee-shop experience – sofas and large comfort of the first place with the facilities of encourages better collaboration and communi- business models. communal tables in an open, casual, and vibrant a traditional second place. They are typically cation among workers, and that remote teams progressive companies According to the research of Gensler, the setting - inside the office space is becoming a open-plan, centred around large, social break- do not perform as well as those that are in close area allocated for amenities is taking up a larg- standard feature of a modern workplace. out spaces, with a range of environments to suit physical proximity. Regardless of how technolo- are transforming the er portion of corporate real estate portfolios. This coffice experience is much more appar- both individual and group work. The flexible gies advance, face-to-face interactions are still In a span of ten years, the percentage of a com- ent in Coworking Spaces - a flexible office space office market is a global phenomenon, with the critical in a knowledge economy. perception of the office pany’s entire portfolio allotted to amenities – where independent professionals work in a number of coworking spaces estimated to grow The design of offices and buildings must be from lounges and cafeterias, to health and well- shared, collaborative environment – where the tenfold over the next few years. Although pri- viewed as an instrument to increase productiv- space from a business ness centres, and playrooms - increased from interior design resemble trendy coffee shops marily used by independent professionals and ity and engagement, by creating more than one 3% to 10%. In the entertainment business and more than the traditional office HQ. Some of small businesses, the concept is making larger single office environment to cater to the wants expense into a strategic and needs of the various departments and individuals that will use them. Offices should and competitive maximize chance encounters and unplanned interactions between knowledge workers to advantage. improve overall performance. The demand for an informal and casual work environment away from the home (first space) and the traditional

16 | PERSPECTIVES DAIICHIPROPERTIES.COM | 17 www.daiichiproperties.com 32ND STREET BONIFACIO GLOBAL CITY

and more established corpora- retention. These innovative and pand or contract space through re- tions rethink where and how work progressive companies are trans- configuration. The office of the fu- is done. forming the perception of the of- ture will include highly networked, The Philippines is currently fice space from a business expense multi-purpose spaces, with shared experiencing similar trends at into a strategic and competitive facilities that fosters collabora- a comparable scale to other advantage. tion, creativity, and innovation. major cities around the world. The importance of flexibility in The difference in the construction The outlook of the flexible office corporate strategy and real estate quality of office buildings built market is promising as it offers an development is of paramount in the Philippines versus other effective entry-level solution for importance in our world today. countries will shrink as the coun- multinational firms entering the The design of offices, buildings, try plays a more prominent role in country, not only in the IT-BPO and communities should reflect the global economy. The road to sector but also in other traditional how 21st century digital work convergence will require sharing industries. These companies have actually happens. As the concept best-practices, open discussions, the option to expand or relocate of work continues to evolve, the and lots of coffee. quickly, with minimal upfront cap- office building must also be re-en- ital expenditures, in Metro Manila gineered to remain relevant in the and beyond. The country is seeing years ahead - with flexible building more hip and artistic coworking systems infrastructure, reusable spaces in the fringe areas of the materials, and the ability to ex- central business district, attracting a younger and more entrepreneurial clientele. These spaces are designed with the offices of Silicon Valley companies in mind. A few multinational and local companies are also applying the coffice experience to attract and retain the young Filipino workforce, and more importantly to increase the chances of collisions for knowledge-sharing. As the Phil- ippine economy grows and overall competiveness increases, companies are becoming more conscious of the role the workplace plays in controlling a far bigger business cost than real estate, namely staff

18 | PERSPECTIVES Passionate Enduring Sustainable

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20 | PERSPECTIVES