Office occupancy falls again as Melbourne feels bite of circuit-breaker lockdown

Melbourne's office occupancy fell to 24 per cent in February, as the city's circuit-breaker lockdown stalled confidence in Victoria's return to office plans.

The Property Council of Australia's February Office Occupancy Survey released today, shows a decrease from 31 per cent in January, although the figure has risen from 12 per cent in December after reaching a low of 7 per cent in October.

Despite a fall in the number of people returning to the office in the face of the most recent outbreak in January, the Government restarted the safe and progressive roadmap to reopening offices, with up to 75 per cent of public and private sector employees now able to return to the office from 1 March 2021.

The Property Council of Australia is calling for bold Government and business initiatives to attract and encourage Victorians to return to the office more quickly. Each one office job supports another five CBD jobs, and the Property Council is an ardent advocate for the return of workers to the CBD as the critical factor to revitalising Melbourne.

The Property Council of Australia's survey of Australian workplaces shows that Melbourne's office occupancy levels still significantly lag Sydney's, which has risen slightly to 48 per cent. All other capital cities currently enjoy occupancy levels greater than 60 per cent.

15 per cent of survey respondents consider that workplace safety concerns are contributing to lower occupancy levels, whereas around 25 per cent cited Government lockdowns to have influenced occupancy and over 30 per cent cited changed workplace preferences.

Over 50 per cent of survey respondents think that it will take more than three months to see a material increase in occupancy levels. The experience of other Australian cities shows that the full return of office workers to Melbourne's CBD is still some months away at best.

Office occupancies are calculated on whether a tenant's employees are occupying the space or working from home, not whether a lease is in place. The Property Council has been surveying our members who specialise in the office sector to track progress in the return to office.

The Property Council of Australia is actively tracking office occupancy data through our periodical Office Occupancy Survey. All data collected across Australia's capital cities, has been aggregated to provide a market-by-market consensus overview. The next edition of this survey is due to be released at the start of March.

The Property Council of Australia's Office Occupancy Survey is nation-leading, in depth analysis of Australia's office occupancy levels. The Property Council of Australia is actively using these data sources to advise and inform the Victorian Government's return to office roadmap.

Quotes attributable to the Property Council of Australia's Victorian Executive Director, Danni Hunter

"While the slight fall in office occupancy is no great surprise, it reflects the fragility of Victoria's return to office plan and the difficult decisions being made by the Victorian Government as they work to manage outbreaks in Victoria.

"Despite occupancy falling in February, there has been an uptick in people coming back into the CBD in the first week of March with the lifting of the office occupancy cap to 75% of public and sector workers. With more people returning to the office, the city is starting to hum again.

"It will be critically important over the coming two to three months, that Government and the business community get creative about how to remind people of the benefits of coming together in the office in a COVID-safe way. The benefits of collaboration, of connecting with peers and friends and of finding a new work-life balance are immense.

In the property industry, we want Melbourne's office community to return to the CBD faster because we know this will supercharge the recovery of our CBD and broader economy.

It's time to work together, across government and business, to excite Victorians to come back into the office and to change behaviours entrenched in lockdown by attracting, incentivising and encouraging Victorians to return to Melbourne's CBD."

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