Influence of Occupiers ’ Characteristics in Office Space Decision

In a unitary city system, firms choose to locate in the city centre that offers the most efficient form of face-to-face communications with clients and suppliers. However, firms are heterogeneous and they may have different considerations in their office space decision, the assumption of the agglomeration economies may not, therefore, be strictly binding. Extended along the behavioral agenda, this study evaluates the office space preference of occupiers in Suntec City using a structured questionnaire survey. Based on the mean score statistics, the sample firms ranked the image and prestige of the office location and the accessibility by public transport as the two most important factors in office space choice process. Proximity to competitors or firms in similar business line, which was the proxy for agglomeration economies, was ranked the second lowest among the 36 office space determinants. Using the principal component methodology, the office determinants were reduced to 8 latent principal factors, which explain more than 75% variances in the office space determinants for the sample firms. When we examine the influence of the 8 principal factors on the office space decision of the 4 homogenous clusters of firms using a multinomial logistic regression model, it was found that firms that place significant importance on face-to-face convenience and image and branding of the office location will likely be those that have a flatter organization structure. These firms are more willing to pay a rental premium to be close to the competitors, suppliers and clients. The pro-business environment factor will appeal to firms that have already established a strong business network in the building.