A new national report from workplace strategy and design firm Spaceful has revealed a strong link between workplace design and employee satisfaction and retention, suggesting that the physical office is becoming a strategic business tool. 

Based on responses from more than 1000 Australian workers and 200 business leaders, the ‘Spaceful Workplace Insights Report 2026’ finds that 88% of organisations that invested in physical workplace improvements in the past two years saw productivity increase. In the same pool of respondents, 65 percent recorded lower staff turnover.

Spaceful workplace strategist Emma van Kool says the findings confirm that workplace design has a measurable impact on performance: “The office is a strategic asset, not a cost line.”

At its core, the new research identifies three factors driving successful workplaces:

Performance: spaces that enable focus

• Workplaces that balance concentration and collaboration perform better than those that don’t.
  
• 66 percent of employees say access to quiet areas is critical to their productivity.
  
• Environments that support both solo and group work correlate with higher engagement and output.

Purpose: design that attracts talent

• Office environments now form part of the employee value proposition, with 62 percent of leaders saying workplace design plays a critical role in attracting and retaining staff.
  
• 40 percent of respondents opted to mandate in-office workdays, primarily to strengthen culture and connection rather than justify the real estate rental fees.
  
• Workplace culture ranks among the top three considerations for employees evaluating job offers.
  

Belonging: design that enables choice and engagement

While hybrid work remains the preferred choice for respondents, the report found that working styles were returning to favour office-based working practice. In the past year alone, hybrid working preference fell from 72 percent to 58 percent. 

Moreover, the share of employees who want to work in the office full-time tripled, rising from 11 percent to 35 percent. In all, only seven percent wanted to work in a fully remote capacity – yet 49 percent of CEOs reported difficulty attracting workers back without mandates.

Accordingly, Spaceful design director Michael Spinoglio says that modern workplaces must do more than simply house employees: they must enable them to do their best work and reinforce organisational purpose.

“By aligning physical space with organisational purpose, businesses can create environments that drive performance and innovation,” he says. 

A time-restricted market opportunity

Amid the new report’s key findings, a notable influence of time pressures was keenly emphasised. The report warned that current commercial property conditions – which include high vacancy rates and incentives such as fitout contributions – offer a rare window for organisations to secure premium corporate workspace. 

With vacancy rates expected to tighten, and those incentives projected to evaporate, companies with leases expiring between 2026 and 2028 face a shrinking opportunity to act. Van Kool says organisations that move now can create workplaces that boost performance, engagement and retention, while securing favourable property terms.

“Leaders who move now can take advantage of current conditions to create workplaces that not only reflect their culture,” she says, “but deliver long-term value through performance, retention and engagement.”

Download the full report here. 

Pacific National café. Image: Supplied.

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