The property lobby is cheering Sydney’s return to the office – but it looks like most workers are sticking to three days a week

Australian offices are generally going sideways more than they’re filling up. (Photo by Steve Christo, Corbis via Getty Images)
  • The latest occupancy data published on Thursday shows Sydney CBD offices became significantly more full in April.
  • The harbourside city however still hasn’t hit 60% occupancy levels yet, while Melbourne has only just surpassed 40%.
  • Elsewhere, other cities began sliding or stagnating last month, suggesting there isn’t going to be a rush back to the office for five days a week.
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Australian workers have slowly begun filing back into the office again but occupancy rates look more like they’re hitting a ceiling than finding a floor.

The latest stats from the Property Council of Australia (PCA) show that Sydney and Melbourne are continuing to make progress from fairly low bases, while the rest of the country plateaus.

“The ‘new normal’ is emerging as we approach 12 months since Sydney came out of lockdown. Workers are re-embracing face-to-face engagement with their colleagues and clients and valuing human connection and interaction that just can’t be replicated through online meetings,” NSW executive director Jane Fitzgerald said.

Sydney made the biggest leaps and bounds as offices filled up another 9% in April alone.

“Treasurer Dominic Perrottet has been proactively working to encourage people back into the city, including holding an Ideas Summit last month and there is no doubt that the State Government, and the City of Sydney, are stepping up to the plate to ensure the engine room of the State’s economy fires up again,” Fitzgerald said.

However, while Fitzergerald claims it shows the Harbour City was “starting to get its mojo back”, it continues to trail most of the country. Offices hit 59% capacity in April, only trailed by Melbourne which only just lifted above 40%. Sydney may have its May progress short-circuited meanwhile as some restrictions returned to the city on Thursday.

Elsewhere, some of the busier CBDs are actually beginning to slide backwards. Canberra, Adelaide and Perth offices were slightly emptier in April than they were in March. Other cities like Brisbane and Darwin made no improvement, while Hobart ticked up only slightly.

Darwin and Perth, two of the cities most successful at quashing virus outbreaks, are exceptions in terms of getting workers in for the equivalent of four days a week. Largely three days appears to be closer to the rule, for Canberra, Brisbane and Sydney, with Melbourne a stark outlier at just two.

In a survey of building managers, the vast majority were not expecting a material improvement for more than three months, with most believing a preference for flexible work was precluding a return to the office.

Large corporates certainly appear to be onboard with the three-day average. Australia’s second largest bank Westpac CEO Peter King told media on Monday that he was content with offices being around 60% full, a sentiment echoed by ANZ and the other big four.

Tech companies like Atlassian have struck an even more liberal arrangement, allowing workers to only come in four times a year, despite building a 40-storey Sydney headquarters.

The PCA has been one of the loudest voices during the pandemic to urge businesses to return to the office, as a quick and successful transition to work from home (WFH) arrangements undermined the necessity for retaining expensive leases. No where has this been more evident than in CBDs that became ghost towns overnight last year.

As virus panic has begun to subside, offices again began filing up late last year, but clearly some uncertainty remains. Domestic investment in commercial property fell to its lowest level in five years in the first quarter of 2021, with sales down one-fifth on 2020.

Office investment was slightly higher than last year, but given Australia began locking down in the middle of March, it doesn’t say a great deal.

Of course, there are advantages to seeing colleagues in the flesh, reflected by a push to have employees in the office at least a few days a week.

“City vibrancy relies on workers being able to return to their offices and re-engage with their peers, frequent retail and hospitality venues in the CBD and attend networking events,” Fitzgerald said.

The PCA is now encouraging Sydney and other cities to do more to get CBDs moving again. It proposes Sydney should promote itself to the rest of the world as open for business. Local residents meanwhile should be incentivised to lunch in the city, events should be held, and public sector employees should be corralled back to work, if the PCA had its way.

After all without some further measures, this might be as busy as Australian cities are going to get for now.