DEMAND FOR OFFICE SPACE DEFIES PANDEMIC

Demand for office space has lifted in every Australian capital city CBD, defying predictions of a pandemic-led collapse of the office market.

According to the Property Council of Australia’s latest Office Market Report, tenant demand lifted an average 1 per cent across the country’s CBDs, and 0.7 per cent in non-CBD markets, with every capital city bar Sydney and Brisbane recording demand increases higher than their historical average.

Property Council of Australia Chief Executive Ken Morrison said the figures were very heartening, especially given the spread of Omicron.

“These are a striking set of figures which illustrate that the office is alive and well in today’s economy, even as the pandemic changes how we use workspaces,” Mr Morrison said.

“While many expected this once in 100 year global pandemic to cause a major spike in office vacancy, these figures show that hasn’t eventuated.

“While aggregate vacancy levels has risen slightly from 11.9 per cent to 12.1 per cent, the driver of this has been new supply of office space, not a drop in demand.

“The reality is that most CBD businesses continue to see the office as integral to their future, and that is reflected in the increased demand for office space over the past six months.

“The comparison to the 1990s recession is stark. During that crisis, vacancy rates blew out by a massive 15.6 per cent over three years, whereas during the two years of the COVID-19 pandemic, they’ve shifted only 3.3 per cent,” he said.

The latest Office Market Report, which is released twice a year, shows the national vacancy rate lifted slightly (0.2 per cent) in the six months to January 2022, driven by an increase in supply of office space coming onto the market.

“The supply of office space across Australia has been above the historical average in three out of the last four reporting periods, which means since the onset of the pandemic, office developments have continued to come online, and demand for it has largely kept up,” Mr Morrison said.

“The data matches what we’re hearing, and that is that tenants clearly see collaborative and well-designed office space as a key component of their ‘new normal’ of working.

“Although these results illustrate the resilience of the office market, there remains a critical need for governments and businesses alike to reinvigorate our CBDs as soon as the health situation allows, and the Property Council of Australia remains committed to leading and contributing to those efforts,” he said.

For the full details about the Office Market Report and January 2022 results, click here.

ENDS

Media contact: Ellie Laing | 0416 007 830 | [email protected]