JP Morgan notes that physical office occupancy rates across Australia’s capital cities remain well below levels prior to the COVID-19 pandemic, despite the fact that workers are gradually returning to on-site work. The investment bank says office vacancies are forecast to peak at about 20% in Sydney and Melbourne over the next four years, as companies opt to reduce the amount of space they lease.
Accordingly, Property Council of Australia CEO, Ken Morrison, is calling for workers to return to CBD offices:
Mr Morrison said while the way people work and use offices is changing, successful businesses were built on people being connected, collaborating and working in teams in physical workplaces…
Landlords have pointed to the broader imperative to resuscitate major CBDs as important drivers of productivity and innovation and the PCA said the two biggest CBDs – Sydney and Melbourne – each contribute around 7 per cent of national GDP.
“People coming back into the office also matters for all of those businesses in the CBD, including hospitality and retail, which depend on their customers being back at their office workplace,” Mr Morrison said.
Allowing workers to return to offices a few days a week is sensible. But returning to the office should be optional for workers, subject to them performing their role adequately from home.
Survey after survey after survey has shown that Australian employees want to keep working from home (WFH) in some capacity. This relates to the time and cost savings from not having to commute into work, as well as the flexibility WFH provides.
The argument that workers need to return to CBD offices in order to support CBD businesses is also myopic.
While these CBD businesses are undoubtedly suffering from WFH protocols, suburban businesses nearby people’s homes are benefiting as economic activity is redirected there.
Thus, WFH presents a transfer of economic activity, not lost activity.
The welfare of both workers and suburban businesses also must be taken into account.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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