The rise of remote work during the pandemic has left many office buildings with rows of empty desks – a stark symbol of a transformed work landscape. While some companies are eager to see employees return to these once-bustling hubs, the question lingers: is work from home the new normal, or will we see a return to the office grind?
According to the Australian Bureau of Statistics (ABS), in August 2023, around 37% of Australians report working from home regularly. This is a significant increase from pre-pandemic levels, but slightly down from the peak in 2021.
There’s no denying the appeal of remote work for both employees and employers. Employees cherish the flexibility and improved work-life balance it offers, along with potential savings on commuting. Employers benefit from a wider talent pool, reduced overhead costs associated with maintaining large office spaces, and potentially even increased employee productivity.
A rise in CBD office vacancy rates in the aftermath of the pandemic, coupled with the rapid increase in interest rates has had a profound negative impact on office values nationally. Whilst this may not appear to impact Tenants, ultimately owners that lose value or equity in their assets find it increasingly difficult to fund capital works such as base building upgrades, but also to fund incentives through capital contributions towards fit out works to attract new Tenants to their buildings.
In addition to this with the increase in costs of fitout constructions, the business case for Tenants to relocate to new buildings can be difficult to justify in some instances, where Tenants staying put can sometimes be far more cost-effective.
Furthermore, the future of hybrid working and the current economic climate are making it difficult for businesses to determine their future occupation needs in the short to medium term with certainty. These factors can make it challenging for office building owners to back fill vacant space at the current time.
The long-term future of work arrangements will depend on several factors, including the specific industry, company culture, and employee preferences. Companies that embrace flexibility and offer a well-designed hybrid model are likely to attract and retain top talent in a competitive market. However, the trend of empty desks may continue unless companies can demonstrate the clear value proposition of in-office work in this new era.