INDUSTRY NEWSNationalNEWS

Rain and trains hampering office occupancy recovery

Continued heavy rain across the East Coast as well as public transport disruptions have slowed the return to the office for many CBD workers.

The Property Council’s Office Occupancy Survey for September 2022 found that markets such as Adelaide, Perth and Brisbane CBDs recorded an uplift in staff returning to the office while Sydney and Melbourne’s CBD results continue to lag behind.

Ray White Commercial Head of Research Vanessa Rader said after a harsh and prolonged period of multiple government-imposed lockdowns in Sydney and Melbourne, the urgency to return to office work on a regular basis has diminished. 

“Adding to the hesitation for staff to get back into the city has been the poor weather conditions this year, high levels of rain has resulted in 2022 being the wettest winter for the last 20 years, with flooding in some areas being yet another deterrent for staff to make their way into the CBD,” Ms Rader said.

According to Ms Rader, initial signs of recovery in Sydney during May were quickly halted, resulting in occupancy levels flatlining.

“Rather than moving upward, occupancy levels moderated and now are recorded at 52 per cent with many blaming not only the wet weather but a public transport system in disarray,” she explained.

“Statistics from Sydney Trains confirm train patronage has been down the last three months with trips less than half that of pre-COVID-19 levels.”

Meanwhile, Melbourne has enjoyed a slight uptick in occupancy this month, and now sits at 41 per cent after the prior two months’ results sat below 40 per cent.

“With vacancy at 12.9 per cent for the Melbourne CBD, the highest rate since 1999, and more uncommitted supply tipped to enter the market, the short term outlook will be difficult,” she said.

“While leasing inquiry is in the marketplace, many tenants are seeking smaller or adequate spaces for their current workforce, catering for business growth via their staff not being in the office on a full-time basis and work from home solutions.”

For many businesses, the skills shortage has resulted in greater flexibility for workers, meaning the recovery for the office market may be extended over a longer period than initially anticipated, according to Ms Rader.

Ms Rader said outside of Sydney and Melbourne, office occupancy rates were looking stronger.

“There have been encouraging results for markets such as Brisbane CBD, which have seen a significant rebound in workers back in the CBD with occupancy hitting 70 per cent, a rate unseen since June 2021,” she said.

“Midweek occupancy has recorded occupancy up to 79 per cent, however can range as low as 55 per cent for Mondays and Fridays. 

“Perth and Adelaide CBD markets, which did not endure the same levels of lockdowns during COVID-19 as the Eastern States, have been rapid in their recovery, recorded at 76 per cent and 78 per cent respectively, peaking as high as 84 per cent.”

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.