BEFORE THE PANDEMIC, there was a shortage of office space looming within the Sydney and Melbourne CBDs.
In fact, both were heading towards unhealthy vacancy levels of around 2% to 3%.
However, with extended lockdowns and some new supply coming onto the market … all that has clearly changed.
Ultimately, the CBD office space requirement for most companies will probably return to pre-Covid levels – albeit in a different configuration.
The New Dynamics
As a result of social distancing, some employees will prefer continuing to work from home. Plus, there is now a need for more collaboration space. And while the overall size CBD office footprint may end up the same, you will start to see a new internal layout for traditional offices.
However, some firms have already decided to relocate whole departments out into the suburbs – to help reduce the commute time for their staff.
And any employers who dismiss these looming changes will probably be left behind.
Vacancy Rates Will Decline
During all of this, Sydney recorded a 24,700 m² net absorption over the September quarter. And Melbourne wasn’t far behind with 24,100 m².
Other capital cities have shown a much quicker return to working within their CBD offices – mainly due to less severe lockdown conditions.
As such, there should be a progressive decline in overall vacancy rates, back to within the traditional 6% to 8% range – where the marketplace considers to be “balanced”.
Bottom Line: Once the dust settles, you will find a new “normal” will emerge for CBD office accommodation. And hopefully, it will be one taking advantage of the productivity gains enjoyed during lockdown – leading to a far more creative office use and layout, from what we have traditionally known.
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