Recent national media reports have highlighted a growing trend among Australian employers that are eager for staff to return to the office (for at least part of the week).
While the specific effects may vary depending on location, industry, and economic conditions, the move is likely to have a significant impact on commercial property.
Let’s explore what this means for commercial property owners and investors.
Increased demand for office space: As more companies require their employees to return to the office, there will be an increased demand for office space, particularly in urban centres. This could lead to higher occupancy rates and rental prices.
According to new data released in August from the Property Council of Australia, demand has spiked for office space in the Adelaide CBD, with the city recording its third consecutive period of positive demand, sitting 5.9 times higher than the historical average. This demand has seen the CBD’s office vacancy rates drop from 19.3 per cent to 17.5 per cent in the six months to July.
Shift in office space preferences: Companies may seek out office spaces with different amenities and layouts to accommodate hybrid work arrangements and promote collaboration. This could include features like open-plan layouts, collaborative spaces, and on-site amenities.
Could there be a suburban office market revival? Some companies may choose to relocate to suburban areas to offer employees more affordable housing options and a better work-life balance.
Impact on retail and hospitality: The return to in-office work is likely to benefit retail and hospitality businesses located near office buildings, as employees may be more likely to visit these businesses during their lunch breaks or after work.
Flexibility and adaptability: To meet the changing needs of businesses, commercial property owners may need to adapt their spaces and offer flexible lease terms.
Considering the impacts the sector may face, commercial property owners can create a more attractive and functional workplace that meets the evolving needs of returning office workers and contributes to the long-term success of their properties.