Presentation to
Association for Project Management (APM)
Impact of Information &
Communication Technology
(ICT) on Office Demand in
Singapore CBD
Dr Sing Tien Foo
Centre for Real Estate Studies
Department of Real Estate, NUS
9 April 2002
Outline of Presentation
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Introduction
Trend in ICT application
Effects of ICT on Office Space Allocation &
Work Practices
Survey Sample & Data Collection
Mailed Questionnaire Results
Logit Model and Other Statistical Tests
Case studies by interview
Conclusion
Introduction
ICT has frequently been thought to be the
driving force behind today’s economy.
 It is generally felt that there is a direct
relationship between investment in ICT
and productivity improvements, which
include
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
better customer service
 greater product variety
 shorter response time
 enhanced product quality; and
 better customization of products and services.
What is ICT?

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Information & Communication Technology (ICT)
is used to refer to infrastructure and product
development that facilitate the collecting, storing
and analysis of information that may be
transmitted electronically
It includes equipment like telephones,
communication lines used to enhance
communication between employers and
employees, businesses and customers, and
business and business across physical
boundaries
Growing ICT Adoption Rate in
Singapore
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Government has been actively encouraging firms to
upgrade their connectivity and productivity via its agencies
like IDA, EDB, PSB
Schemes offered include:
 Local Enterprise Computerisation Programme (LECP) by
IDA (assist SME to achieve higher competitiveness
through effective use of IT)
 Jumpstart Programme by PSB (assisting SME to adopt Ecommerce)
IDA’s “Information & Communication Technology ICT
usage survey 1999”indicates a high ICT adoption rates
among businesses in Singapore
What are the Implications of ICT for
Office Operation and Space
Usage?
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Computer and information technologies are expected to
bring about “the third wave” of revolution to the production
and social interactions in the new economy
How would these new ways of production and customermanufacturer relationships impact on the demand for office
space?
Would this IT revolution lead to a major structural change in
the office space demand?
How would the location choice, spatial configuration and
functional connectivity of the physical office space be
changed to meet the demand of the IT-driven businesses?
ICT Trends & Investment in
Singapore Office Buildings
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In Singapore, IT-ready office space commands a market
premium over obsolete and IT-unfriendly office buildings
A trend of facelift to existing office buildings where
developers or owners spend million of dollars to provide
broadband connection and raise floor facility to entice
tenants in IT related business
Singapore Land Tower located in the prime Raffles Place
business district is one the building that is currently
undergoing million dollars upgrading to improve its
facility and functionality
Hot-desking, home-office and tele-working is another
emerging trend in the office market,
These will significantly transform the way work is carried
out and lead to a reduction in demand for physical office
space in the long run
Relationships of ICT-readiness on
Offices Space Use?
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How would active integration of ICT into the work place
help companies to reduce the physical space
requirement?
Aren’t the companies’ space decisions dependent on the
prevailing market rents?
There are no easy answers at this stage to the
questions.
However, the market driven and ICT induced office
space demand shifts can be conceptually explained
ceteris paribus using the familiar demand function as
shown in Figure 1.
Office Space Demand
Market
Rent
D
D’
R’
a
b
R
Original
Market Clearing
Condition
Aggregate
Demand
Curves
D
D’
Q’
a = demand shift caused by rental increase
b = structural shift in demand curve brought about
by the ICT revolution
Q
Quantity of space
Source: Dr Sing Tien Foo
5 Levels of ICT-Induced Firm Operation
Evolution
Degree of business transformation
High
Level 5: Business scope redefinition
Level 4: Business network redesign
Level 3: Business process redesign
Level 2: Internal integration
Revolutionary
levels
Evolutionary
levels
Level 1: Localized exploitation
Low
Low
Range of potential benefits
High
Source: Venkatraman, 1991
Impact of ICT on Office Space Demand
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ICT impacts on office space demand would take place in
three broad areas:
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business function and configuration,
staffing structure and
location choice.
More information and transaction via the virtual space
rather than the physical space (e.g. internet banking,
electronic stock brokerage, NET transaction)
Flatter organization structure.
Ratio of clerical staff to administrative and executive staff
is likely to reduce
Productivity of the staff increases as a result of office
automation.
Span of control of managerial staff
ICT-induced decentralization of office space for
companies that operate largely over the virtual space.
Research Design –
Survey Sampling & Data Analysis
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Mailed Questionnaire Survey – pilot phase
In 4th quarter 1999 URA statistics, 41.64% of the
total of 5.88 million square meters of office
space were concentrated in downtown core.
Sample of tenants is restricted to CBD areas
500 tenants in offices within CBD areas ar
randomly selected
Response rate was poor at 9% (46 responses)
Distribution of respondents profile (Figure 1)
Respondents’ Profile
11%
7%
28%
28%
26%
Real Estate, Finance & Insurance
Business, Retail, Trading & Advertising
Media, telecommunication & IT
Trasport, Industrial Biz, & Legal
Others
Current Office Size (sf)
Occupied
11%
7%
9%
73%
Below 5000
5001- 10000
10001 - 15000
above 15000
Importance of ICT Products?
Desktop
Laptop
Printer
Mobile Phone
Fax Machine
Voice Mail
Video Conferencing
Intranet/LAN
Internet/Server
Email
Electronic Data Sharing
Customized/Task
Oriented Software
1
2
3
4
5
6
7
8
9
10
11
12
67.4
0
30.4
13
65.2
0
37
2.2
52.2
4.3
13
19.6
4.3
41.3
50
15.2
58.7
4.3
2.2
0
Not Important
Very Important
73.9
21.7
19.6
15.2
20
34.8
40
60
80
Impact of ICT on Office
Operation?
Quality of Space
8
Overall Space Req’d
Employee’s time in
Office
7
Need to Meet-up
5
67.4
13
65.2
6
26.1
71.7
67.4
0%
8.7
19.6
13
82.6
Importance of
3
Meeting Place
78.3
Number of Meetings 2
8.7
19.6
Workers Productivity 4 10.9 6.5
Cost of Operation 1
19.6
19.6
54.3
32.6
32.6
20%
No Change
32.6
40%
2.2
13
34.8
60%
Reduce
80%
100%
Increase
How ICT Help to Improve
Productivity?
No
11%
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Yes
89%
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Shorten Data process
time (82.9%)
Reduce Number of
Clerical Staff (58.5%)
Reduction in storage
space for document
(56.1%)
Increase Span of control
of Middle Management
(51.2%)
Does ICT Facilitate Working
Away?
Does company
encourage work away?
No
43%
17
Yes
57%
9
No
Yes
ICT on working practices
Nature of
works that
will suit
“working
away”
practice

60%
50%
40%
30%
20%
10%
0%
e ng nt ers
v
i
t eti me th
a
r
t ark age O
s
i
in M an
m
M
A
Reasons against
working away practice
 Lesser
control (34.3%
 Lack of trust (11.4%)
 Nature of job site
(80.0%)
 Resistance from
employees (2.8%)
Customer Services & ICT
Usual Meeting Place
On-site
Customer's office
Respondent's Office
0%
20%
40%
60%
80%
Means of Establishing Contacts with Customers
In Person
By mail
Telephone
Email
0%
20%
40%
60%
80%
100%
Factors influencing office space
requirement
Location of building
Nature of business
Prestige of building
IT-readiness of building
Employee size
Building size
Rent
0%
46%
30%
20%
22%
63%
39%
70%
20%
40%
60%
80%
Logit Model 1
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Factors affecting perceived space change in future
Variable
SECTOR
OFFSIZE
ICT.EXP
MAINTNCE
WEBPAGE
NO.EMPLY
C.EMPLOY
AT.WKAWY
RENT.DRP
PDTY.OFF
Constant
Coefficient
Standard error
Wald statistics
Significance level
-.259
-1.737
1.478
1.638
-1.841
.910
-1.518
5.997
3.843
-1.532
-2.871
.265
1.959
1.159
1.078
1.736
1.301
1.756
3.050
2.449
2.094
4.297
.956
.786
1.625
2.308
1.124
.489
.747
3.867
2.462
.535
.447
.328
.375
.202
.129
.289
.484
.387
.049
.117
.465
.504
Logit Model 2
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Factors affecting actual office space changes
Variable
Coefficient
Standard error.
Wald statistics
Significance level
.040
.131
.091
.763
OFFSIZE
-.765
1.527
.251
.617
ICT.EXP
-2.020
1.913
1.115
.291
MAINTNCE
1.584
1.102
2.065
.151
-3.930
1.958
4.027
.045
NO.EMPLY
-.495
1.093
.205
.650
C.EMPLOY
2.547
1.750
2.118
.146
AT.WKAWY
1.368
1.737
.621
.431
RENT.DRP
2.456
1.532
2.570
.109
PDTY.OFF
-1.803
1.821
.981
.322
-.011
3.440
.000
.997
SECTOR
WEBPAGE
Constant
Case Interviews – A Quick Glance
Business type
Productivity Staff
Strength
Location Choice
Insurance
Yes
Less clerical
Hot-desking in future
Non-profit training
institution
Marginal
No impact
No impact
Legal service
Definitely
Less clerical,
More IT staff
Near courts, near clients
Dot.com
Central theme
Related staff
Near client, no hot-desking
Property
Consultants
Yes
Less clerical
No hot-desking, face to face
important
Property
Consultants
Definitely
Less clerical,
More IT staff
Cant hot-desk, face to face
important
Management
Consultants
Definitely
Less clerical,
more
consultants
Near CBD, Office hoteling
Medical Suppliers
Yes
Less clerical, IT
outsourced
Outside CBD, face to face
important
Case Study 1 – Allianz Insurance
Management Asia Pacific
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70 staff in Singapore office
ICT increases efficiency & productivity of employee
and reduces manual and clerical-type tasks
Minimizing operation cost in long-run
Moved from Shaw Building to Centennial Towers –
space increased from 10,000 sf to 20,000 sf
Reasons: expansion of business and prestige of
the Mariana Bay office location
Wireless applications will have impact on work
practices, as staff are frequently not working from
their dests
Tele-conferencing & hot-desking is important
Case Study 2 – Accenture
Consultants – Business services
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The firm provides consulting services related mainly to
business management and technology
500 staff in Singapore office
Located in the Gateway Building
25% increase in space over the last 3-year due to
business expansion
Adoption of office space conserving concepts like “office
hoteling” and “hot-desking”
80% of staff are professional consultants, and they are
apt to office hoteling – worked mostly at the clients place
ICT expenditure – 3% total operating expenses
ICT increases productivity & revenue
It reduces clerical staff, but increases IT personnel to
maintain the system
Conclusion
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Growing trends in ICT application in office
Improved productivity via automation of selected operations
Impact of ICT on demand is not significant
Small proportion of respondent experienced a reduction in
employee size with an increase ICT investment
Physical meeting place and office space are still important
Most respondents do not encourage employees to “work
away” away from office
The logit models suggest that probability of office space
reduction is related to the increase adoption of new work
preactices
Availability of webpage may also be a factor affecting the
downsizing of office space
We will continue to see changes in the office space use and
emerging of new office practices eg. Service office,
telecenter, hot-desking etc.
Thank you
Questions & Comments
The author wishes to thank Mr Don Toh for his research assistance.