Fantasy vs. Reality: How Unicorn Groups are influencing the market

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According to data from Accru.com, as at the end of May 2019, there are now over 326 ‘unicorn companies’ around the world and since January 2018, 119 new companies have joined the club.  

Unicorn companies are privately owned startups with a valuation of US$1 billion or more. These billion-dollar-babies owe their existence to huge amounts of venture capital.

Topping the 2019 list of Unicorns is China’s Bytedance, an Internet technology company delivering individually tailored news and media content with a $75 billion valuation. Uber is still the world’s second largest unicorn at $72 billion, with Chinese ride hailing competitor Didi Chuxing close behind at $56 billion. The USA still has the most number of unicorns (around half) followed by China with about a third. 

According to Christina Malcolm, Director, Office Leasing at Savills Australia, many global businesses, especially tech companies, are choosing to start their empire in a co-working environment, where there is room for expansion, flexible lease terms and competitive rents.

“The Sydney office market is seeing a shift in landlord behaviour – as they become further in tune with what their tenants want and need, offering flexible lease terms, not just in the co-working space but also within the REIT portfolio arena to help deal with expansion.” 

Ms Malcolm said today’s office environment needs to cater for this new age of workplace talent.

“Savvy agents and in turn, landlords are educating themselves about attracting Unicorn status groups and offering an office environment that suits these successful start-ups, technology, wellness, flexibility, location – retaining and attracting staff. 

Ms Malcolm said this is not just a CBD based trend, with a number of regional and interstate landlords breaking the mould and focusing on offering their tenants a better work/ life balance, while future proofing their buildings with inviting and flexible turn-key specs and wellness rooms. 

“Many new tenants are looking for a collaboration culture in their workplace with plenty of amenities and facilities that will keep their employees happy.

“The tenant community is definitely influencing the market,” she continued, “These companies are our future so they have to be aligned with the forward thinking landlord. 

“In a way, landlords are becoming more Chameleon-esque to fit in with the ever changing workplace terrain.

“Buildings are maturing, growing up. In years gone by they would cry (set off alarms) when things were wrong and it was up to the building‘s guardian (building managers) to work out what was wrong. Much like a toddler, buildings were incapable of explaining why they were crying. 

“But now buildings are young adults. Current buildings are akin to Unicorns’ favoured Gen I employees. They are smart, connected, able to communicate, not just advise what is wrong, but also how to fix it, they take the initiative and in some cases fix themselves. They even help write apps to make life easier, they let you, the user, bring your own device and hook it up to access its amenities like lifts, parking, meeting rooms, wellness spaces and end of trip facilities.

“Building owners are using this new found maturity and teaching their buildings to think for themselves by adding Integrated Communication Networks (ICNs) which are only limited by future technological advances”. 

These networks will allow buildings to grow as technology grows and is evidenced by Dexus’ investment in the Skynet platform and Investa’s work with Willow on its digital twin initiatives. 

With long-term retention of assets and tenants being their goal, the introduction of these systems improves the maintainability of the buildings and more importantly, provides options for the tenants to better connect with, customise and more efficiently utilise the building and its amenities.

Savills is a leading global real estate service provider offering the full spectrum of services from strategic advice to managing assets and projects and transacting deals. Christina Malcolm is a Director within Savills Office Leasing team. To learn more about Savills, visit savills.com.au.