Aussie workers to prop up commercial property sector

Property Council of Australia chief executive Ken Morrison highlighted that while businesses are changing their approach due to the pandemic, Australians returning to the office will spur economic growth. 

“There’s a powerful economic effect from people working together in offices, which is why our major CBDs are such important drivers of productivity and innovation. Our two biggest CBDs – Sydney and Melbourne – each contribute around 7 per cent of national GDP,” Mr Morrison said. 

“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.” 

Property Council members have welcomed the leadership shown by governments and business in supporting a return to the office as health restrictions have been lifted.

“There’s a growing momentum for people to come back to their workplaces, and our members are ready to support their return in the coming weeks and months,” Mr Morrison said.

An independent study from Colliers International revealed that as a growing number of workers return to their offices, vendors and investors are expected to review acquisitions, with demand for office assets expected to soar during what’s usually a relatively quiet period.

Overseas investors are forecasted to up their interest in Australia’s office sector, particularly that in Melbourne, while a recovery in white-collar employment should enhance demand for office space in Brisbane’s CBD, which is already seeing a gradual improvement in the occupancy rate.

According to Collier’s, Melbourne saw an “extremely positive” fourth quarter, as Victoria emerged from lockdown and interstate borders reopened.

“We expect to see a deeper buyer pool for the Melbourne office sector, with continued interest from offshore investors as well as the return of listed REITs, whose share prices precluded them from much activity in 2020,” said Collier’s Victoria-based managing director, John Marasco, director of capital markets Trent Preece and associate director of capital markets Anna Cavar.

Brisbane is also expected to show strong signs of growth in office spaces. 

“Job creation in sectors such as public administration and safety, and professional, scientific and technical services are expected to drive a recovery in white-collar employment and base office demand in the Brisbane CBD,” Colliers national directors of capital markets Jason Lynch and Don Mackenzie said.

While Australia’s largest city, Sydney, is expected to boast an increase in demand for office assets, with core grade assets expected to garner the most attention from investors and landlords.

As most major corporates plan to move their employees back to the office, Collier’s predicted that the return to the office environment, which is likely to occur during Q1 2021, will create greater confidence and certainty moving forward, and provide buoyancy to the market.