People are heading back to their places of work, and office occupancy had tripled in Sydney and Melbourne over the last month, according to the Property Council’s latest office occupancy survey.
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Three key takeaways:
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Government restrictions are easing, business events are resuming, and people are returning to their offices – with further increases in office occupancy expected in the new year.
“We know COVID-19 and successive lockdowns left our major CBDs deserted, so it’s good news, even at this traditionally slower time of year, that people are heading back to their places of work,” says Property Council chief executive Ken Morrison.
Figure 1: Overall occupancy in office buildings as a percentage of the pre-COVID rate
Note: This data is presented as a percentage of the pre-COVID rate of office occupancy, which is estimated at 90%. If a CBD achieves the same level of occupancy as the pre-COVID norm this will now be presented as 100%.
In Sydney’s CBD, for example, office occupancy levels have increased from eight per cent in October to 23 per cent in November. On November’s peak days, Sydney’s occupancy was at 31 per cent over. According to Property Council NSW executive director Luke Achterstraat “there is optimism that these numbers will continue to rise, and our economic recovery will remain strong”.
“Restrictions are easing, business events are resuming and our public servants are returning to offices, so we can expect further increases in office occupancy into the new year,” Achterstraat adds.
Canberra – which hit 100 per centfirst dose vaccination in mid-November – is “poised to rebound” early in 2022, Morrison notes, especially with “greater government support for the public service returning to the office”.
Brisbane, meanwhile, which has been largely spared from the extended lockdowns of other states, has posted steady growth in occupancy, “but we still need more momentum to bring more life to the city”. The Summer in the City campaign will position the new year as an opportunity to reset and bring teams back together in the workplace.
Concerns about workplace safety and public transport have fallen, and Morrison notes that “it’s increasingly the personal choice for flexible working that’s driving people’s decisions”.
Figure 2: Peak and low days of occupancy in office buildings
While Australia’s CBDs are enjoying “good positive momentum” the timing of the Christmas break “will put a pause on this,” Morrison warns.
However, two-thirds of office owners, according to the Property Council’s survey, expect to see a material increase in occupancy levels in the next 90 days.
Another source of optimism is the performance of Australia’s real estate investment trusts, which according to BDO’s latest research, have “roared back into life”. A-REITs outperformed the S&P/ASX 200 Index by 7.1 per cent and delivering a positive return of 31 per cent. The industrial, retail, office and diversified sectors all returned positive returns in FY21 – a first since FY18.
The future of CBDs will continue to be a focus area for the Property Council in 2022.
“Across the country the Property Council has been working closely with political and business leaders to re-start the hearts of our CBDs, and we look forward to continuing those efforts in the New Year,” Morrison concludes.