The Australian capitals where WFH employees are digging in

If you’re looking for office space in Brisbane anytime soon, you might want to get a move on.

That’s according to the last data from the Property Council Australia which has just released its biannual Office Market Report.

The report shows the Sunshine State capital has recorded a fall in vacancy rates over the past six months from 12.9 percent to 11.6 percent. There is even less available office space available in the nation’s capital, with vacancy rates in Canberra falling from 8.9 percent to 8.2 percent. Perth and Adelaide also reported modest falls in office vacancies as more businesses entice workers back to their desks.

However, it’s a different story in the country’s two largest capitals, with Sydney and Melbourne data revealing vacancy rates are on the rise.

Property Council Chief Executive Mike Zorbas said Sydney and Melbourne face some challenges.

“Demand remains strong in four of the six capital cities captured in our detailed survey, but it has subsided across the big two, Sydney and Melbourne,” Mr Zorbas said.

“Sydney and Melbourne experienced slight vacancy rate increases with over 200,000 sqm of new office space planned in the next three years. However, pre-commitment rates are lower than Brisbane, with only 42 per cent in Sydney and 17.4 per cent in Melbourne already secured by tenants,” Mr Zorbas said.

Businesses have been trying in recent months to entice more workers back to the office in a post COVID environment offering everything from fully stocked fridges to board games to make workplaces feel more welcoming.

Mr Zorbas said CBDs were key economic centres and governments around the country need to support them to ensure they remain vibrant.

“Thriving CBDs are an essential part of our national economic prosperity and support the viability of large-scale public transport systems and investments in public amenities,” Mr Zorbas said.

“We need parliaments and public and private sector leaders to recognise and champion the superior relationships, organisational, economic and societal outcomes that come from face-to-face teamwork in cities and towns across our nation each and every week.”

The post-COVID return to CBD offices continues across Australia, with the average office occupancy rate climbing to 76 percent of pre-pandemic levels in the first quarter of 2024, according to new CBRE figures. Workers are gradually responding to their employers’ requests to attend their offices more regularly to enable greater collaboration with workmates. The occupancy rate has risen from 70 percent in the December quarter and 67 percent 12 months ago.

Occupancy rates improved across all capital cities during the March quarter, with Perth and Adelaide maintaining the strongest rates of 93 percent and 88 percent respectively. CBRE analysis suggests shorter commuting times and less structured working-from-home arrangements in these cities have contributed to higher rates of return. Brisbane’s occupancy rate is 86 percent of pre-COVID levels, weighed down by a slower return within the public sector, which represents 35 percent of the city’s office space. This same trend is being seen in Canberra, where the occupancy rate is just 66 percent.

In Sydney, the occupancy rate has risen to 77 percent, largely due to major banks and professional services firms pushing for more staff to return to the office this year. There has been a significant increase in workers returning to offices in Melbourne, with the occupancy rate up from 57 percent last quarter to 62 percent now. However, this is still the lowest attendance rate in the capital cities.

Businesses are increasingly pushing workers to return to the office because they are concerned working from home over multiple years will have a negative long-term impact on company-wide productivity. Part of the problem is new employees not having regular access to senior staff so they can learn and work more effectively and productively. CBRE says lower levels of collaboration and interaction reduce innovation, which is a particular concern for technology firms. They were quick to embrace remote working during COVID, but are now seeing dampened creativity among staff.

Tuesday is the peak day for attendance at CBD offices and Friday is the lowest day. Two-thirds of organisations that have moved their corporate headquarters since COVID have chosen to upgrade to premium office buildings, according to CBRE’s research. Premium blocks typically feature retail, restaurants, and recreational amenities on the ground floor, and command a higher rent. Companies are deciding it’s worth the cost to entice workers backand keep them feeling happy and engaged.

Jenny Liu, Director of Workplace Consulting at CBRE, said a vibrant workplace experience is essential.

“A workplace experience isn’t just environment, cool furniture and tech anymore,” she said. “It’s the culture, ways of working, leadership, and how vibrancy is created.”

Some companies are using apps that inform staff who will be in the office tomorrow. CBRE Research Manager Thomas Biglands said:

“It’s important that you achieve a critical mass of visitation so that employees come in and feel as though the office is vibrant and full,” he said.

Some firms are linking salary and promotions to office attendance to reward those workers providing higher contributions to corporate culture and mentoring younger staff.

The rate of return to offices in Australia is much higher than in the United States, where occupancy rates have remained at about 50 percent over the past year. CBRE analysis suggests this may be due to better public transport, shorter commutes and lower inner-city crime rates in Australia.

The Australian capitals where WFH employees are digging in

A leading industry body warns that some CBDs need support if they are going to thrive economically

Companies are leasing premium office space to entice workers back, but employees in one major capital are holding out