Melbourne offices will be allowed back to work on Monday — but after nine months of working from home, the future of the CBD still remains unclear.
Key points:Up to 25 per cent of workers will be allowed back in the office from MondayMany businesses are unlikely to return to regular in-office workMelbourne CBD accounts for about 7 per cent of the nation’s GDP, but there are concerns traders will fail without office workers
When the workers from tech consultancy firm Digital First got together for the first time since March, it wasn’t at their usual office in the city.
Instead, the team convened in a rented-out meeting room in a high-rise just a few blocks away.
Back in September, and in the middle of Melbourne’s second lockdown, managing director Grant McWhirter decided not to renew Digital First’s office lease.
For a tech company already fully integrated in the cloud, working remotely didn’t present any insurmountable challenges — despite the fact that two of the firm’s newest members had never met any of their colleagues in-person.
“We thought about social distancing, the effort of getting up to the floor in the lift, and the increased commute for employees, and we sort of said, ‘You know what? We don’t need to work in the city’,” Mr McWhirter said.
“We don’t know how long the pandemic’s going to go on for and it’s not impacting our business. And people were happier working from home. The whole team was happier working from home.”
Digital First’s boardroom meetings have a different feel as face-to-face meetings return.(ABC News: Peter Healy)
From November 30, businesses will be allowed to get back into the office with up to 25 per cent of their staff, but that’s unlikely to lure Mr McWhirter and his team back to a traditional working model.
“At some point, we might reconsider or look at alternatives,” he said.
“But I don’t believe we’ll go back to a five-day-a-week office, with all the staff in the office.”
Catch up on the main COVID-19 news from November 28 with our coronavirus blog. Occupancy in Melbourne’s CBD is at a record low.(ABC News: Patrick Rocca)Infection fears may slow return to the office
According to figures from commercial real estate firm JLL, Digital First may not be the only company opting to give up its office lease in Melbourne’s CBD.
From July to September this year, the percentage of office buildings without tenants soared to 11.3 per cent, despite the city recording a historic low of 3.4 per cent just months earlier.
Many businesses will not be immediately returning to the Melbourne CBD.(ABC News: Patrick Rocca)
Data from the Property Council of Australia also found occupancy rates in Melbourne CBD offices fell to just 7 per cent in October this year, compared to 77 per cent in Perth, 73 per cent in Adelaide and 40 per cent in Sydney.
“Because of Melbourne’s extended lockdown, and current government restrictions, we’re seeing Melbourne well behind the other cities,” said Matthew Kandelaars, the interim executive director from the Property Council of Australia’s Victorian division.
“We’re also seeing that in states and in cities that are more public transport-reliant, the return to work hasn’t been as pronounced or quick.”
Occupancy rates in the Melbourne CBD have fallen to just 7 per cent in October.(ABC News: Patrick Rocca)Read more about coronavirus:
In an October survey of its Melbourne tenants, Dexus — one of the country’s largest corporate landlords — found two of the biggest concerns for businesses returning to work once restrictions were lifted were the risk of infection, and staff willingness to use public transport to and from work.
Businesses told Dexus they expected public transport usage by their workers to drop from 70 per cent down to 40 per cent for the first three months after returning to work.
For Digital First’s Mr McWhirter, the daily commute to work was a major factor when deciding to give up the firm’s CBD lease, but he’s also reluctant to do away with face-to-face interaction entirely.
“The team are quite happy working from home at the moment, but we are aware that that won’t last forever,” Mr McWhirter says.
“We’re considering options such as coworking spaces where we can have more flexibility, rather than the commitment of an office five days a week.”
Pedestrian numbers have increased since the depths of lockdown, but traders are missing office workers.(ABC News: Patrick Rocca)Flexible spaces for uncertain times
In the weeks following the end of Melbourne’s lockdown, coworking space The Commons saw a surge in enquiries — in fact more enquiries than managing director Cliff Ho had seen pre-COVID.
“There’s been a lot of people over the last eight months that have had their lease end, and they’ve been out of an office space, so they’re now looking for something in 2021 to return,” said Mr Ho.
“And then we’re also seeing a huge demand from companies downsizing.”
Cliff Ho inquiries about The Commons spaces have increased as traditional office spaces have emptied.(ABC News: Simon Tucci)Stay up-to-date on the coronavirus outbreak
A few years ago, The Commons typically catered to smaller companies with fewer than 10 workers, but that’s been steadily changing as businesses look for more flexible options.
“Our members include PayPal and Spotify — to name a few —and they’re taking up large spaces,” Mr Ho said.
“Especially over the last few months, we’ve had some big enquiries come in for 50 to 100 desks — so that’s encouraging for us.”
Shared office space in Melbourne’s CBD still remains largely empty.(ABC News: Simon Tucci)
Outfitted with streamlined cubicles, shared communal spaces and slick amenities, Mr Ho said coworking spaces offer the benefits of traditional office spaces, without any of the commitment of a long-term lease.
“When the economy fully recovers, when times are good again and companies are looking to grow, they’ll still sign their traditional leases, they’ll do their own fit-outs,” he said.
“But in times of uncertainty, flexible office space does make a lot of sense.”
A rise in sub-leasing Since March, people have been told if they can work from home, they must.(ABC News: Simon Tucci)
However, even in times of uncertainty, not every company is looking to permanently relinquish its office space, with many instead turning to sub-leasing, according to commercial real estate giant CBRE.
Ashley Buller, CBRE’s head of leasing in Victoria, estimates Melbourne’s sub-lease market has increased from roughly 20,000 square metres to 100,000 square metres over the past few months.
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“What we’ve seen, which is interesting, is that there’s obviously this trend where people are working from home and are talking about continuing to work from home for say, one to two days a week,” he said.
“As a result, some tenants are saying, ‘Look, maybe we can reduce our office space requirement by circa 20 per cent’.”
Mr Buller said it has typically been larger tenants with multiple floors who are prepared to give up entire floors to see whether they can make do.
“I think during this time companies have learnt how to become a little bit more efficient with using office space — though time will tell whether that’s going to carry forward once Victorians can get back in the office again,” he said.
CBD businesses feeling the absence Empty shopfronts litter the CBD as traders wait for a return of office workers.(ABC News: Patrick Rocca)
It’s now been almost nine months since Victorian workers have been in the office, and the flow-on effect of their absence is being keenly felt in Melbourne’s CBD.
At a council meeting on Tuesday, City of Melbourne deputy chief executive Alison Leighton revealed 2,000 shops in the CBD were now either closed or vacant.
“The City of Melbourne is the nation’s most impacted local government authority with respect to the pandemic,” Ms Leighton said.
“We’ve seen 13.2 per cent of jobs lost since March, which compares to 6 per cent for Victoria and 3 per cent for Australia.”
A shopfront is locked during the coronavirus pandemic in Melbourne’s CBD in November, 2020.(ABC News: Patrick Rocca)
Before the pandemic, more than 900,000 people travelled into the city every weekday.
The City of Melbourne estimates that number will drop by 38 per cent — a figure that’s concerning for the Property Council’s Matthew Kandelaars.
“The Melbourne CBD accounts for 7 per cent of the nation’s GDP. It’s enormous,” he said.
“The number of workers who aren’t travelling to the CBD who would otherwise be spending money at a coffee shop, at a sandwich bar, at a newsagent — they simply aren’t here at the moment.”
It’s a view that Mr Ho from The Commons mirrors.
“I’d love for the CBD to come back to life, because for small businesses, restaurants, retail, we really need that,” he said.
“The world wasn’t set up for this.”
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