Some Australian Cities See Better Office Occupancy Than Others
AUSTRALIA – Banner Asset Management’s latest quarterly real estate report indicates that employees are hesitant to return to the office, with the country’s overall office vacancy level rising to 14 percent in Q2 2022, surpassing the 13.5 percent seen in the 1st quarter and the 10-year average of 11.2 percent, reported Real Estate Business on Thursday morning (22 December, SGT).
However, there is a large variation in office occupancy rates across different Australian cities. In cities less impacted by COVID-19 lockdowns, like Perth, Brisbane and Adelaide, the office occupancy has recovered to more than 70 percent, based on Banner Asset Management’s data.
On the other hand, cities that have witnessed repeated and persistent lockdowns are taking longer to rebound. According to a September survey by the Property Council of Australia, the occupancy in Melbourne ranges between 39 to 41 percent, while that in Sydney remained at 52 percent.
“A possible explanation for this divergence is that Melburnians and Sydneysiders spent more time working from home over the pandemic and thus became more accustomed to the lifestyle. Breaking free from these habits appears to be a greater challenge for these workers,” said Banner Asset Management’s CEO Andrew Turner.
“This preference to work from home has become stubbornly commonplace in Melbourne and Sydney, leaving workplaces emptier than before the pandemic and casting a shadow over CBD office property.”
Nonetheless, investment in office properties has remained robust in these two cities. In Q2 2022, office investment in Sydney hit A$410 million, pushing the 6-month tally to A$2.78 billion, the highest since 2019. Melbourne is also registering consistent investment activity, with about 2.48 million sq ft of new and refurbished office properties forecasted to enter the market by the end of 2024.