In 2017, Suncorp Group selected FACTION Consulting as its project manager to assist with its Brisbane office consolidation strategy, engaging with industry, site and development partner selection (Mirvac), workplace fit out and delivery, through to handover earlier this year.
The following questions, posed to Suncorp Group CEO Steve Johnston by FACTION’s Gary Finnegan, provide insights into Suncorp’s considerations around the Group’s planning and commercial objectives and futureproofing the workplaces.
..
Gary Finnegan: Suncorp Group’s offices in Brisbane were spread across three locations prior to your move and consolidation. What were the corporate objectives you hoped would be achieved from the consolidation?
Any other objectives you could quantify in advance?
Steve Johnston: Suncorp has a proud heritage in, and a deep commitment to, Queensland. The alignment of lease expiries in our three Brisbane CBD sites was the perfect opportunity to create a new consolidated workplace environment, that allows our people to live our purpose which is ‘building futures and protecting what matters’.
We envisioned an environment that would bring all our Brisbane CBD employees together, support and enhance our workplace experience and work with a development partner to develop a flexible, interconnected workplace that supports all our stakeholders. The workplace solution had to deliver a new model of flexible space to accommodate change, accelerate innovation and power a strategic leap in business performance.
Gary Finnegan: Suncorp has a highly skilled internal property team – what were the benefits in having an external advisor for additional support and the rationale for that? And what influenced your choice of advisor e.g. what special skills and qualities were you looking to complement for your team?
Steve Johnston: Yes, we do have a great internal team but a project like Heritage Lanes at 80 Ann Street required bringing together a multi-disciplinary team with specific skills. A project of this scale, especially involving a new development, needs specialist skillsets in project and program management, construction, design, engineering and an ability to manage both our own work and interface with our development partner.
We wanted to find a team with the right experience, expertise and personnel who shared the same culture, values and mindset.
Gary Finnegan: Being such a large occupier of space in the Brisbane market, Suncorp was a highly contested prospective tenant for a large number of developers and sites. How did you approach the developer / site selection and evaluation process? To what extent was the decision driven by physical site location within the city, and to what extent was it driven by the choice of development partner?
Steve Johnston: We were very intentional in identifying a physical location to suit our aspirations as well as a developer who could truly ‘partner’ with us. Our expression of interest to the market clearly called out both the requirement for a high performing, technologically advanced and environmentally sustainable building, as well as the desire to form a strong professional partnership with the developer to jointly deliver a great outcome.
We knew a development of this scale would have challenges, so we wanted to find a partner prepared to solve problems together, who was open minded and innovative, prepared to collaborate to create the right mindset for everyone to be their most creative and ultimately to form a relationship with us that stands the test of time – and we were able to achieve these objectives with Mirvac.
Gary Finnegan: Having settled on a preferred site and development partner, the negotiations around the agreement to lease terms became critical. What were the key drivers from Suncorp’s point of view in terms of these commercial and risk terms – overall occupancy cost, lease terms, opportunities around flex space, management of outgoings and operational costs, ESD principals? Any in particular that were especially challenging to negotiate?
Steve Johnston: With a significant 10-year lease term, we needed the agreement to lease to address the delivery of the building and our long-term occupation and accommodation needs. Both these elements impact our overall occupancy costs. We were looking for a sustainable building that could cater for our future.
We needed to address how we contractually managed the construction risk and delivery of our fit out and how to obtain early occupation of a number of floors due to exiting two of our three sites before the building was complete. These were challenging negotiations.
Another big focus was on our future ability to expand and contract during our tenure and to consider how we could access a greater level of flexibility than would be traditionally negotiated. While we do have expansion and contraction rights in our lease, we also pioneered a three-way arrangement with Mirvac and IWG (an international co-working provider) to have flexible space available in the building.
Gary Finnegan: In selecting Mirvac at Heritage Lanes, knowing that the anticipated completion of the building was estimated to be 6 months later than your lease expiries at 123 Albert Street and Brisbane Square, can you give insight to the risk mitigation measures that were adopted and implemented to satisfy you and the Board? And were these measures successful?
Steve Johnston: At the time of selecting Heritage Lanes as our new Brisbane headquarters, we knew the lease expiries of our existing tenancies did not align with the completion of the building. We could have attempted to extend these leases knowing that we most likely would be carrying substantial lease tails and associated costs. However, since the Brisbane 2011 Floods more than ten years ago, Suncorp has been trialling, implementing and evolving flexible ways of working including the technology to support working from home. We were confident we could manage a period of increased working from home.
But we also understood construction risks and matters which could impact our ultimate occupation. This is where the importance of selecting the right building and development partner (who is also a long term owner) was paramount. This assisted in negotiating ‘early occupation rights’ enabling Suncorp to occupy almost 16,000m2 of space in the lower half of the building while the upper floors were being completed.
Gary Finnegan: Suncorp’s relocation is particularly interesting given that your space planning, interior designs and workplace features would all have been conceived prior to the onset of Covid-19 and citywide lockdowns. Some contend that Covid has fundamentally changed the way offices will be used in the future. What has been the Suncorp experience? Did you question or change your initial space planning whilst lockdowns were in place and amend designs, or have you found your original decisions vindicated?
Steve Johnston: As I touched on earlier, Suncorp has been implementing and evolving flexible ways of working well before the pandemic began. This flexible approach to working has always been valued by our people and COVID-19 has reinforced our ability to work from home at scale effectively. From project inception, enabling this flexibility was critical and a catalyst to incorporate design and technology focused less on individual activity and more on collaboration.
Suncorp’s original design planning was based on a fundamental shift from individual to team-based working and spaces. The pandemic accelerated that thinking and only minor amendments in terms of features were required such as additional personal lockers – which really was a testament to the forward thinking, thorough planning and vision of our internal and external project teams.
Gary Finnegan: In terms of the physical move into your new premises, how has this been received by Suncorp staff? Are you able to sense any immediate benefits in people and culture?
Steve Johnston: We have only had access to all our floors since May 2022 and completed relocations in early July, so our people are still settling into their new environment but the feedback on the new workplace so far has been overwhelmingly positive and we’re seeing more of our workforce come in to engage and connect with their colleagues and utilise the great spaces available.
Gary Finnegan: To what extent have the original commercial and human resource expectations you hoped would be achieved from the consolidation and relocation been achieved do you think? And how do you think these might evolve over time?
Steve Johnston: The overwhelming response to Heritage Lanes has been really positive. It’s given our people a highly collaborative and connected workplace experience. We are confident that we as navigate changes to the way we work, our new workspace will support our needs.