Despite what many reports have predicted, this week’s release of the Property Council’s Office Market Report has not delivered large scale withdrawals of office tenants from the Sydney CBD. In fact, our vacancy rates have remained relatively steady, and we are leading the charge on the ongoing supply of commercial office space to the market. All this, despite our office workers being some of the slowest in the country to head back to the office.
The juxtaposition of this nearly three years after first being sent to work from home in the first COVID wave is interesting for a number of reasons. Firstly, if office workers are slower to return to the Sydney CBD, why are employers choosing to not only retain their office presence, but are willing to pay more for the best product in the market – and demanding more of it – if we have truly moved to a hybrid way of working?
Australia’s low unemployment rate, particularly in professional services is creating a race to offer premium, contemporary workspaces that draw on the aesthetics of the home environment, providing the best facilities and yes – even putting in place work practices that make it ‘fun’ for people to make the effort to come back to the office.
This ‘flight to quality’ from employers is being driven by a realisation that in order to remain competitive, they will always need a place for employees to come together to receive the benefits of collaboration and drive productivity. They also know that you can’t ‘lead from the lounge room’ forever. Put simply – those that have the best offices will have the greatest chance to attract and retain strong talent, and with that comes a shift change in what is hot right now in the office market.
The other conundrum employers are facing is how to culturally shift employees from an expectation of ‘working from home’ as an almost new condition of employment. Interestingly, Investa’s Group Executive and Head of Development, Mark Tait called for the ‘work from home’ model to be taken out of the workplace vocabulary. As he pointed out – flexible work practices have long been ingrained in human resources practices – and that quite simply, we need to switch the thinking from a hybrid way of working, back to just simply offering flexibility where people want to effectively manage a work and home life balance.
He is right. We were sent home in 2020 to work because of health and safety reasons. We were restricted from shopping, dining out, from going to cultural and sporting events.
We were curtailed from nearly every aspect of our normal lives. But now it is safe to do all those things, we have not continued to limit our participation in life, in the same way we have continued to limit our hours in the office. The foot traffic data in our CBDs after hours and on weekends proves it. So yes, perhaps it is time to shift our thinking back to our pre-covid understanding about the value of the workplace, of interacting, learning, developing and leading together under one roof.
What is clear from this week’s Office Market Report is that the office is not dead. Employers may be thinking differently about what they want to offer their staff – but they aren’t backing away from the true learnings of COVID in relation to the workplace. The best work, happens at work. And they are standing ready to prove it.
Adina Cirson is the Acting NSW Executive Director of the Property Council of Australia.