The future of office working
Empty CBDs were perhaps the most visible sign of COVID-19 in Australia, as many thousands switched to home working during lockdown. Most office workers are yet to return even as infection rates have cratered, and the future of the office sector itself is under discussion.
CHEUNG I think there will be ongoing discussion around flexible working and the future of the office. The key for tenants is to work out what their staff want and what their future office looks like.
There are mixed messages, but most employers are trying to strike a balance between workplace flexibility and recognising that the role of the office is still important in relation to the mental health of their staff and making sure people remain connected. There are further business benefits of having a central workplace, such as driving company culture, collaboration and innovation.
WHITE We think demand for office space will grow in line with employment growth over the long term. In the post-COVID-19 environment, most of the impact on demand for office space will be a result of the economic slowdown rather than changes in work practices.
We have seen examples of major global firms that currently have their staff working remotely taking up leases on large office spaces in the major cities of the world. They clearly have a long-term view that they will be back in the office at some point.
A lot of discussion around the future of the office has been at one end of the spectrum or the other – either we will not be in the office at all or we will be in the office 100 per cent. The focus right now is on flexibility, but we do not see this going to an all-or-nothing situation.
Offices have a core role to play in developing culture and fostering collaboration and innovation. Many of our customers are working hard to understand how they can make a hybrid model work and we expect some businesses to continue to experiment with providing more flexible working arrangements in the short term. They will need to understand the real productivity impact of alternate models before attempting to strike the balance that best suits their circumstances.
MASON Office was a booming market prior to the pandemic, with exceptionally positive leasing spreads. With developments in 2020, there are questions around whether things like hot-desking will remain viable – even with a vaccine.
The health and wellbeing of staff has become paramount and we know packing everyone into an office is not going to be popular going forward. However, absorption in the office space has been quite high so we are not overly concerned about the outlook.
There are also questions now around hub-and-spoke offices. Our view is that this seems unnecessary when people can work comfortably from home.
SCHRETZMEYER We can have 80 per cent of our people in the office at any time. I have been coming to the office full time since June, which has been fantastic. This is the state of play for senior management in the business and the others are on a rotation.
WHITE We are also back at 80 per cent of staff in the office across the country, except for Melbourne. Where we could get people back, we have done so. We are pleased with the New South Wales government’s announcement to remove the public health order requiring employees to work from home if they can and expect numbers to grow in Melbourne as its restrictions are further eased.
Flexible working was a part of our culture before the pandemic, and will continue to be so, but we recognise our best performance as a team happens when people are collaborating in the office.
It is great being in the office. Conversations are much more effective when you can do them in person and coming across people in the corridors is a great way of quickly resolving an issue or strengthening relationships. From my own team’s perspective, we get more out of having five minutes face-to-face than we do in half an hour across multiple phone or Zoom calls.
It is also very difficult to build team culture at the end of a video line. A lot of what younger people in organisations learn comes from being in an office environment.
ROWE As an organisation, we are implementing a hybrid model where the treasury team has a few days in the office and one day optional. We will identify two or three days within this where we synchronise having everyone from the team in the office. I think this is where most people and businesses will settle.
Of course, things are different for our Melbourne-based staff and going forward it will depend on how well the virus is managed and contained.
ROWE We have run pulse surveys throughout the year. At the start of the pandemic, some people wanted to work from home forever! As time has gone on, this has changed. We now get responses indicating around 5 per cent of people would still prefer to work from home all the time, 15 per cent want to be in all the time, and the bulk in the middle want to come in three or four days per week.
WHITE Density may reduce a little, where companies retain their space but have fewer desks. There is no doubt some will require less space, but I do not think this will be material in the broader scheme of things.
PARKER The CFOs we have spoken to believe enforced social distancing and working from home has proven successful. They have been able to continue operating and, in the longer term, see this as an opportunity to revisit their tenancy requirements and potentially reduce costs.
I hear the points about optimisation of staff time in the office, and this will be an enduring requirement of a lot of organisations. But there is evidence that heightened subleasing of space is occurring, and a view from some CFOs that they perhaps do not need as much space. This is a concern for the future demand for office space as the pandemic progresses.