With more than half of Canberra public servants still working from home, what does this mean for the federal government’s office footprint?
Image above: ISPT New Year building community event at National Circuit precinct, Canberra 2019
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Three key takeaways:
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The Property Council’s ACT executive director Adina Cirson joined leaders from the Canberra Business Chamber and Australian Hotels Association last week in a call for public servants to get back to the office.
Fifty-five per cent of Canberra public servants – 30,600 people – were working from home on 11 August, according to a census from the Australian Public Service.
“This is significantly impacting many of the businesses on ground floors of office buildings, in particular those who rely on public servants for trade,” Cirson says.
Cirson says a survey of Property Council members found that just over 40 per cent of Canberra offices are currently occupied. More than 50 per cent of the ACT office market is tenanted by the Commonwealth.
Caleb Brinton, Colliers International’s executive for office leasing in Canberra says the federal government has “mobilised the single largest office workforce in Australia to work from home”.
This now poses new questions about the future of the Australian Government’s 2.25 million sqm of office space.
“A recent survey by UNSW Canberra and CQUniversity suggests that most public servants found themselves more productive at home, and managers were growing increasingly supportive of the solution,” Brinton says.
On the other hand, The Australian reported last week that senior public service officials were worried about a “a slide in productivity”, the lack of mentoring and networking for disengaged junior staff and the potential for sub-par advice from bureaucrats operating “in the land of Zoom”.
Brinton says an array of factors and costs will influence the government’s decision making. A remote workforce comes with significant technology spend and the legal ramifications of ill-equipped work-from-home setups could be significant, he says.
Consolidation was on the cards pre-COVID
Stephen Oxford, a specialist in government leasing with Synergy Group, expects to see more consolidation but says this was underway before COVID-19 hit.
The Australian Government’s 2019 Office Occupancy Report says 63 per cent of the 2.25 million sqm of leased office space will expire within the next five years.
“Pre-COVID, the Commonwealth was leasing 25,000 vacant work points – which covers a desk, enclosed office or service counter – at around $162 million a year.
“The Commonwealth has an efficiency target of 14 sqm per person, with just 30 per cent of agencies currently complying with this. Pressure on agencies’ budgets post COVID-19 will incentivise compliance. This could cut around 300,000 sqm of excess space and save $140 million annually.”
Oxford says government departments do not need more space to address social distancing.
“The average density for the Commonwealth government is 16.2 sqm per person – twice the average of the private sector. Social distancing isn’t an issue when, for every four desks, one or two are empty every single day.”
“COVID has demonstrated that the public service can work remotely. We expect our clients to seek further reductions in their footprints to gain efficiencies from staff working remotely. Some are talking of reductions of a further 25 per cent,” he says.
Brinton agrees.
“With an ongoing target of 14 sqm of usable office space per workstation still being generous by the standards of the private sector, there is no reason to believe that this target will change.
“Arguably, the emphasis will be on the nature of fitouts, and not the footprint itself. Landlords will be encouraged to create proactive solutions to both meet the Commonwealth’s occupancy target, as well as assist in ‘pandemic-proofing’ their tenancy.”
Oxford also thinks there will be plenty of business for fitout companies. “Everyone will be looking for modern fitouts that embrace the flexibility and technology adoption that COVID has enabled. We expect to see space repurposed to encourage team-based work,” he says.
“The landlords with the best amenity – like third spaces in foyers and shared meetings space – are well positioned to respond. The old-fashioned, traditional 1980s stock will struggle unless owners are willing to put their hands in their pockets and address the challenge.”
ISPT Dream Gallery launch at 2 Constitution Avenue, Canberra 2019
The best workplaces aren’t just buildings
The Property Council’s latest Office Market Report posted the lowest ACT vacancy rate since 2012, falling to 10.1 per cent in July – and down from the 13.3 per cent recorded in January 2018.
“Canberra and East Melbourne were the only two markets around the country to record a decrease in vacancy over the six months to July 2020. This is good news for the ACT.”
Cirson says 2022 will see an additional 79,000 sqm of space come online “which is a good sign of the confidence of investors in the Canberra market”.
The market leaders understand an office is more than a desk, Cirson emphasises.
ISPT owns seven large buildings tenanted by the Australian Public Service in Canberra. Each of these A-Grade assets boasts a coveted 6-star NABERS rating for indoor environment quality. This confirms the highest standards of air quality, thermal and acoustic comfort, lighting, layout and – importantly in the Covid-19 era – cleaning practices.
Melinda van der Westhuizen, ISPT’s general manager of commercial services, says it is “early days and we are listening carefully to the needs of our occupier customers” in monitoring how the market will play out. While occupancy levels vary from department to department, “we’re seeing about 30-35 per cent occupancy overall”.
ISPT is confident that assets that offer the best health, safety and amenity will weather the storm, van der Westhuizen adds.
She points to ISPT’s National Circuit precinct, which has taken home Property Council awards for the quality of its amenity. The urban village feel, with cafés and retail, a childcare centre and business centre, offers amenity impossible to replicate at home.
“The best workplaces aren’t just buildings – they are communities of people. Those people will head back to the office because they love the experience of working there. The landlords that can create rich, meaningful experiences will continue to thrive.”