Nestle and DBS are joining the ranks of organisations adapting to the coronavirus pandemic by switching to new work arrangements.
"The effects of Covid-19 have changed the way we work, and flexibility is important for not only our business continuity, but the productivity and well-being of our people," said Natasha Zou, head of workplace solutions, China, at Nestle.
The pandemic has curtailed people-to-people interactions, and an increasing number of companies are adopting new work arrangements and reducing their real estate footprint to tackle the situation. This is likely to affect the demand for office spaces across the world.
Nestle has signed an agreement with co-working space operator IWG that gives all of its employees in China access to all of IWG's 3,500 locations across the world. Nestle has about 273,000 people worldwide, and 26,000 in China, Hong Kong, Macau and Taiwan. "The partnership with IWG forms part of our flexible working concept - to create a better, healthier, more productive and sustainable working environment for Nestle employees throughout China," Zou said.
The agreement is for a "minimum of a year with a view to extend after 12 months", said Paul MacAndrew, IWG's country manager in Hong Kong. The company, which operates spaces in more than 1,100 towns and cities in more than 120 countries, said the deal with Nestle was a pilot and could be scaled globally.
"Up until now, organisations have been taking a gradual step towards hybrid working. But, now, companies of all sizes are accelerating their approach towards the hybrid model," said Fatima Koning, IWG's chief sales officer. "Nestle is a prime example of a progressive company that is empowering its team to work where it is most convenient to them, and all of their employees in mainland China will have access to our network of 3,500 flexible workspaces. This will help their teams achieve a better work-life balance by minimising their commute times, as well as significantly reducing their carbon footprint," she added.
It was, however, unclear if Nestle was giving up or reducing its office space in the LSH Plaza - Daimler Tower in Beijing's central business district.
Elsewhere, DBS is surrendering two of the eight floors it occupies in the One Island East tower, Bloomberg reported, citing people familiar with the matter who asked not to be identified because the information was private. The Singapore-based bank did not immediately comment when approached by the Post, while a Swire spokesperson said they would not comment on rumours.
The Singapore-based lender joins other global banks in giving up office space in Hong Kong, one of the most expensive office markets in the world. Multinational companies, which are more likely to adopt flexible working arrangements as compared to their local peers, accounted for 75 per cent of the surrendered office stock last year, according to Cushman & Wakefield.
HSBC, Hong Kong's largest bank, has also said that it could reduce its office footprint by as much as 40 per cent globally, as it digitises more functions and embraces new ways of working.
These moves represent another blow to the Hong Kong office market, where rents are expected to fall by 7 per cent in 2021 as tenants look to reduce costs, according to Colliers International. Rental rates in the city slumped by 17 per cent last year, the most since 2009, after the double whammy of anti-government protests and the pandemic, data from Savills shows.
Additional reporting by Chad Bray, Bloomberg
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.