Return To Office Crucial To Economic Recovery

AUSTRALIA – While optimism over Victoria’s property sector has rebounded, a major industry group warned that the sluggish return of workers to their office is delaying the recovery of a sector that contributes A$42 billion per annum or a quarter of the state’s economy, reported The Sydney Morning Herald on Wednesday evening (16 December, SGT).

According to the Property Council’s latest quarterly sentiment survey, the outlook over construction activity, hiring, and economic growth have recovered significantly among developers, commercial property landlords, and other industry players in Victoria.

Based on the industry sentiment survey jointly conducted by ANZ and the Property Council, optimism in the state’s real estate market rose sharply from 64 to 115 index points quarter-on-quarter.

However, Matthew Kandelaars, the council’s interim Executive Director for Victoria, cautioned that the slow rate of return of employees to their workplace “will have a significant impact on the state’s economic recovery and future confidence levels.”

As most staff are still remotely working from home, office occupancy at Victoria’s capital Melbourne is still very low at 13 percent versus Sydney’s 45 percent and 61 percent in Brisbane.

One reason for the high vacancy is that office capacity in Victoria is limited at 25 percent, although it will rise to 50 percent from 11 January depending on the state government’s public health advisory. As for Victoria’s 50,000 civil servants in its public service branch, office capacity will rise to 50 percent by early-February 2021.

“If Melbourne’s pattern of office return mirrors comparable cities across the globe, the CBD would not see a return to full occupancy until early 2022,” Kandelaars warned.

“The quickest way to supercharge Victoria’s economic revival and boost industry confidence is to support the continued safe return of workers to Melbourne’s CBD.”

A representative from the state government said they are being careful with their timetable for letting more workers return to their office.

“We’ve always taken a cautious and steady approach, making way for the private sector to begin their transition back to the office first. The Victorian Public Service is preparing to gradually return to the office from January,” she explained.