The Property Council of Australia’s latest office occupancy survey has highlighted the challenge ahead for Melbourne in restoring the city’s economic heart.
The monthly survey of building owners and managers, taken prior to the impact of the current lockdown, has found that the Melbourne CBD remained at 45 per cent of pre-COVID occupancy levels – well behind the other capitals.
During May, Sydney’s CBD experienced a healthy rise in occupancy to 68 per cent of pre-COVID levels while all other CBDs recorded a relatively consistent number of workers returning to their offices.
Property Council Chief Executive Ken Morrison said that while Sydney has largely caught up with other cities, Melbourne remains a cause for concern.
“Even before the current lockdown, it was clear that Melbourne was well behind the pack in terms of CBD recovery,” Mr Morrison said.
“Once the current lockdown has concluded, there will need to be a redoubling of efforts to return the Melbourne CBD into the vibrant city centre that it was prior to the pandemic.”
“Melbourne’s occupancy levels now sit 23% behind Sydney, which has maintained encouraging momentum since the Northern Beaches lockdown disruption earlier this year.”
The Property Council has welcomed last week’s message from the Prime Minister to government and private sector employers that it is “time to get back to the office,” and the National Cabinet’s referral of current office physical distancing guidance to the Australian Health Protection Principal Committee for review.
“Governments have a key leadership role to play by ensuring that their own workforces are turning up to the office, getting the full benefits of in-person collaboration, and contributing to the city economy,” Mr Morrison said.
Prior to the current Melbourne lockdown, almost half of survey respondents identified worker preferences for greater flexibility as the main barrier to achieving full occupancy.
“Flexibility will continue to be a strong feature of working in the post-pandemic world, but the current levels of occupancy are not sufficient to support Australia’s broader economic recovery,” Mr Morrison said.
“Our CBDs support millions of jobs and generate hundreds of billions of dollars in economic activity. We need them firing on all cylinders.”
Mr Morrison said that the property industry has taken the initiative to entice workers back to Australia’s commercial centres through a coordinated program of activations and attractions.
In Melbourne, the Property Council has launched FOMO Fridays in conjunction with the City of Melbourne and the Australian Retailers Association. In Brisbane, the Fridays in the City initiative is bringing together reactivation efforts in partnership with Brisbane City Council, the Queensland Government and other CBD stakeholders. Similar initiatives are in development in other capitals.
“We’ve seen an abundance of exciting activities to draw people back to CBDs, including free coffees and donuts, happy hours, live music, prize giveaways, discounted parking and even tarot card readers.” Mr Morrison said.
“We are already hearing reports of an increase in foot traffic, uptick in office occupancy and a boost in revenue for retail traders and hospitality venues off the back of these campaigns.”
“Building owners and managers are not waiting for government leadership to drive CBD reactivation, we are proactively making the case for workers to return to their offices and reengage with all the benefits of face-to-face working.”
The survey found that 81 per cent of office building owners and managers are not expecting to see a material increase in occupancy levels within the next three months.
Office occupancy as a percentage of pre-COVID levels by CBD
NOTE: The Property Council’s CBD office occupancy data has previously been presented as a percentage of overall office space. To provide a more accurate measure of the reactivation of the Australia’s CBDs this data will now be presented as a percentage of the pre-COVID rate of office occupancy, which is estimated at 90%. If a CBD achieves the same level of occupancy as the pre-COVID norm this will now be presented as “100%”.
Figures are based on responses from Property Council members who own or manage CBD office buildings and cover occupancy for the period from 24-28 May 2021.
*Results for Melbourne were recorded prior to the impact of the ongoing lockdown.