Office occupancy rises as new normal approaches

by Nick Lenaghan  (afr.com – 5 May, 2021)

Seats in CBD workplaces are steadily filling as employees make the trek into the city more often, including in Sydney where offices hit 59 per cent occupancy in April.

Occupancy in Sydney jumped from 50 per cent a month earlier while in Melbourne, which has endured multiple lockdowns, occupancy rose from 35 per cent to 41 per cent from March to April.

All other capitals showed a relatively consistent number of workers returning to their offices from March to April, with Perth CBD’s occupancy affected by the recent snap lockdown, according to the Property Council of Australia’s latest survey of some of the country’s largest office landlords.

Chief executive Ken Morrison said the survey showed “welcome progress” in reactivating city centres.

“The benefits of bustling CBDs are significant, not just for the small businesses that rely on city foot traffic, but for the broader Australian economy,” he said.

“Melbourne and Sydney have been the cities hardest hit by the COVID-19 disruption and it is encouraging to see the big number of workers returning to these CBDs in recent months.”

Almost half of survey respondents identified worker preferences for greater flexibility as the main barrier to achieving full occupancy.

Mr Morrison said flexibility would be a major feature of working in the post-pandemic world, “but there is clearly still a long way to go until our CBDs reach the levels of occupancy anticipated in the new normal”.

Investa, one of the country’s larger office tower landlords, is taking an optimistic view on occupancy, after completing a deep dive into building use by analysing the turnstile data from a major CBD building between 2014 and 2018.

The building in the study had 4800 work-points, yet the average number of employees over the four years’ of data collection showed an average peak attendance on an average day of about 3500 people, or 73 per cent of its apparent capacity.

That figure takes in account the fact that on any given day, a proportion of the building’s occupants will be on holiday, at home sick or taking parental leave, visiting clients, making sales calls or working remotely.

Michael Cook, Investa group executive for property, said that in effect, the analysis showed that 73 per cent occupancy was the building at “full” or at operating capacity.

“If occupancy [in Sydney] is 59 per cent, we are so close to back to normal,” he said.

26 May 2021