Danny is a co-founder and director of Debuilt Property and has a professional career spanning architecture, construction, project management, development and property finance. Debuilt provides a wide range of consulting services to investors, financiers and developers.

The pandemic has dramatically altered the way in which we work.

While there is considerable speculation around the future of the office-home balance, one thing is for certain, we have been forced to experience a different way of working and a lot of people like it (or at least parts of it). 

Back to the office

The office sector has seen a turbulent 12 months. At the conclusion of 2020, Sydney’s office towers were filled to about 50% of their capacity, while Melbourne occupancy was around 13%.

On Monday 18th January 2021, City of Melbourne data indicated 380 pedestrians walked past Southern Cross station on Collins street between 8am and 9am. This count is the highest since March 2020. (Pre-Covid Melbourne hosted an average of 3,800 pedestrians walking around Southern Cross). Whilst this is certainly a positive trend indicating that many office workers are returning to the CBD, there continues to be great interest around the discussion of future working arrangements.

Changing attitudes – here to stay?

In October 2020, JLL undertook an online survey of 2,033 office workers across 10 countries spanning all major industries. Nearly three-quarters of respondents still desired the ability to come into an office, while 70% consider the office as the best place for team building and connecting with management.

With the general success of the remote working experiment and an overwhelmingly positive attitude to workplace flexibility, it is clear that workplace environments will change. One valuable takeaway from the pandemic is that workplaces reduced their dependence on working with printed hard copy files, further aiding the ability to work flexibly.

A hybrid office environment is likely to emerge in order to accommodate for changing workplace needs and preferences. A new normal will most likely take shape in a variety of ways, but the general consensus seems to be that employees might have the opportunity of working remotely for one or two days a week. Some roles could shift entirely online.

The impact on offices

Negative forecasts for the commercial sector’s future are wide-spread, with many predicting a reduction in demand for office space. David Cannington of Investa Research estimates that the uptake of office space could fall by as much as 15% in the coming year as a significant amount of city workers spend more days each week working from home. JPMorgan predicts that demand could take a 10% hit over the next 5 years. QIC, one of the country’s largest property fund managers, predicts half of Australia’s workforce will work from home two days a week following the pandemic, resulting in a 5% fall in net demand for office space.

What these predictions possibly do not take into account is a need for increased collaborative work and meeting spaces, a focus on enhanced employee and guest amenity areas, video conferencing requirements (discussed further below) and ongoing social distancing. This should soften a prolonged negative impact on office space demand.

Video conferencing and online collaboration 

Our initial experience with video conferencing (“the Zoom Boom”) showed us that we could meet, share documents and communicate effectively, despite being apart. Whilst sometimes a little clunky, it still remains a relatively successful ‘second best’ option to meeting in person.

As with all technology platforms, a certainty is that the video conferencing companies are working furiously to enhance their product to close the gap between in-person and online interaction.

Michael Chetner, Head of Zoom Video Communications Australia and Asia Pacific believes the next 12 months will be characterised by businesses learning how to create equality between employees in the office and those at home. The Zoom Meeting Room facility, for example, intends to enhance and streamline meetings between a room full of on-site attendees and off-site individuals. Zoom will also likely further develop their phone service and their real time translation service.

Other mooted developments include a proposal by Japan’s NTT to use projectors and thin, semitransparent screens to mimic a colleague’s head movements in an attempt to make the virtual person’s presence seem more life-like.

With further advancement in technology, offices will also adapt and improve to accommodate the increased use of video conferencing – offices will need to be designed with consideration of an increase in the noise and disruption generated through online meetings. 

Landlords will respond

Whilst physical offices will certainly remain central to work, office landlords will need to make similar adjustments in order to adapt to a new ‘COVID normal’.

Office buildings, not just tenancies, will have to enhance their offering as a destination for collaboration, networking, problem solving and career development. Buildings will benefit from including, or being located adjacent to, quality facilities and spaces that promote collaboration, networking and social interaction.

Despite many predicting a negative outcome for the office sector, Simon Hunt (MD of Office Leasing at Colliers International) says Australia-wide demand for office space is still going strong. He says at the end of Q3 into Q4 Colliers actually saw an impressive 546,000sqm of enquiry recorded for Q4 alone and this was up on Q4 2019 enquiry by 4%. 

Colliers’ Office Demand Index, released in January, indicates that whilst demand was positive in the second half of 2020, the influence of COVID was evident. For example, in Melbourne whilst the government sector was the most active, part of the metro market increase (200,000 sqm more in 2020 than 2019) can be attributed to businesses seeking office space in lower density areas to allow for working closer to home and social distancing measures.

The need for landlords to adapt was reinforced this week, as The Age reported that office vacancy levels have reached highs not seen since the 1990 recession. According to the Property Council of Australia, whilst Covid was a factor, increased supply of available office towers was the main contributor.

Ultimately the space will be absorbed; with the major impact being the commercial return to landlords and a delay in new supply.

So, what does this all mean?

Leaving aside the benefits and opportunities provided by remote working, the ultimate environment to promote team collaboration, mentoring, networking, business socialisation and work efficiency is to bring people together in one place – the office.  

The advancement in remote working options will deliver flexibility and adaptability in the workplace whilst providing the opportunity to enhance the employee experience.

Therefore, the future of work requires the agility for landlords and tenants to adapt to, not only the changes we are presented with now, but also the changes we will be presented with in the future. Through enabling hybrid models of work and empowering employees wherever they are located, the future workplace should be conducive for all.