AXA plans to relocate while other companies look to cut office space

Its office building set to be redeveloped; virus crisis pushes firms to review workplace needs

With the iconic AXA Tower in the Central Business District set to undergo redevelopment, anchor tenant AXA Insurance, which occupies five floors in the building, is making plans to relocate. ST PHOTO: ARIFFIN JAMAR

AXA Insurance is planning to exit AXA Tower, with the iconic building set to be redeveloped.

The move comes amid the Covid-19 pandemic, which has pushed more companies to rethink their use of office space and workplace strategy.

AXA – an anchor tenant at the 50-storey landmark at 8 Shenton Way in the Central Business District – officially opened its offices in 2011.

It was built in 1986 and was originally known as the Treasury Building before it was renamed Temasek Tower in 1997.

In June this year, a Perennial Real Estate Holdings-led consortium sold 50 per cent of its stake to Alibaba Singapore. The parent company Alibaba Group is an anchor tenant of the property. Together, they will redevelop AXA Tower.

Said Ms Hayley Yap, chief people officer of AXA Insurance: “We are making plans to relocate our office due to the impending redevelopment of AXA Tower, and are in the midst of identifying a suitable space that will meet our needs.”

AXA occupies five floors in AXA Tower, with a total space of at least 70,000 sq ft. The building has carried its name since 2011, and AXA declined to disclose the amount it pays for the naming rights.

Today, on average, only 15 per cent of the firm’s 900-strong workforce remains at the office. This is in compliance with the need for a staggered return to the office and safe management measures for workplaces, Ms Yap told The Straits Times.

She added that since 2017, AXA has given employees the option to work from home, and the Covid-19 pandemic accelerated the process.

As more people are now comfortable with working from home, some companies are taking the opportunity to reduce their office space, which could lead to significant savings in operating costs.

A recent survey commissioned by ST of nearly 1,800 people found that eight out of 10 workers now say they prefer to work from home or have flexible working arrangements.

After the circuit breaker period, Sompo Insurance Singapore found in a survey of its employees that most of them can work effectively from home.

Its chief executive officer Pui Phusangmook told ST that “with this encouraging response, the management decided to adapt to this new normal” and house everyone required to be present in the office at the same location.

Sompo Insurance, which used to occupy two full floors on levels three and five of the Singapore Land Tower, reduced 40 per cent of its office space when it gave up level five. “We may have a smaller office space but we managed to accommodate all staff, though currently only 50 per cent of them are allowed to work in the office,” said Mr Phusangmook.

The company found that for roles such as underwriter, claims reviewer and administrator, all functions can be carried out remotely from home. But in other areas such as customer service and IT support, employees will be more effective in the office.

Aviva is also exploring the possibility of reducing its office space, its spokesman told ST.

Citigroup and Mizuho Financial Group in Singapore are looking to cut office space, Bloomberg reported recently.

The latest market report showed that office rent and occupancy continued to slide in the third quarter of this year.

Real estate consulting firm Knight Frank has noted in its third-quarter report that the amount of shadow space – which refers to space leased out but not actually used by the tenant – has increased as corporates continued to review the most efficient use of space through working-from-home rotations.

E-commerce and technology companies continued to lead office space demand, while more traditional businesses have been contributing to co-working space demand as corporates harness these flexible spaces on shorter leases to augment their space requirements, the report said.

Meanwhile, displaced tenants of buildings undergoing redevelopment, as in the case of AXA, could also generate leasing demand.

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