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Omicron and ‘flu wave blamed for office occupancy slide

Hoped for CBD increased occupancy levels drop “disappointing but unsurprising”

The latest wave of Omicron and flu infections are being blamed for office occupancy rates across most major cities to go backwards in July.

A new Property Council of Australia’s (PCA) ‘Office Occupancy Survey’ found  Melbourne’s occupancy dropped from 49 to 38 percent across the month in July, Sydney from 55 to 52 percent, Brisbane from 64 to 53 percent and Adelaide from 71 to 64 percent.

Canberra and Perth were the only markets to record an increase in office occupancy, from 53 to 61 percent and 65 to 71 percent, respectively.

PCA  Chief Executive, Ken Morrison said the results were disappointing but unsurprising due to the rise in case numbers.

“Office occupancy numbers have gone backwards for the first time in six months as a wave of omicron and flu cases kept workers away from the office,” Mr Morrison said.

“We have been seeing a steady increase in the number of workers retuning to offices, but this stalled in June and has now declined in most capitals, which is disappointing but unsurprising.

“Looking ahead, we are encouraged by the fact that this Omicron wave seems to have peaked and that spring is around the corner. Hopefully this means the recovery momentum can resume,” he said.

Mr Morrison said the low levels of CBD occupancy needed to be factored in when governments were considering measures to manage the pandemic.

“We know office occupancy has been slow to recover, unlike other indicators which snap back quickly,” Mr Morrison said.

“The losers are not the office tenants or the owners of office buildings, it’s all those retailers, cafes and restaurants who rely on office workers as their customers.

“We want those businesses and their jobs to survive because they give our CBDs such vibrancy.

“Governments and health authorities need to remember that asking people to work from home is not a zero cost exercise – the costs are real and we see them in the vibrancy of our CBDs,” he said.

Despite the effects of the pandemic and a drop in occupancy, the Property Council’s latest Office Market Report shows that businesses have leased more space across the country’s CBDs over the past six months, with demand increasing by a healthy 0.5 percent.

The latest office occupancy survey found the preference for greater flexibility including working from home was a major driver of occupancy levels, but this has decreased from 63 to 48 percent.

Health concerns surrounding the latest wave also proved to be a major influence on the data, rising from 17 percent in June to 30 percent in July.

Given that the newest wave’s peak infections period appears to be behind us, Mr Morrison said it is critical that governments communicate clearly with business and not send mixed signals regarding working from home.

The survey was conducted in the field between July 25 and  August 1, 2022.

Office Occupancy rates:

Market

Melbourne CBD

Canberra

Sydney CBD

Brisbane CBD

Perth CBD

Adelaide CBD

Jul-20

20%

49%

36%

48%

67%

62%

Aug-20

8%

53%

33%

50%

61%

68%

Sep-20

11%

51%

39%

58%

70%

74%

Oct-20

8%

70%

44%

68%

85%

81%

Nov-20

14%

72%

50%

68%

85%

76%

Jan-21

34%

76%

50%

70%

74%

77%

Feb-21

27%

72%

54%

72%

72%

77%

Mar-21

39%

72%

56%

69%

79%

79%

Apr-21

45%

70%

65%

70%

78%

78%

May-21

45%

71%

68%

71%

77%

78%

Jun-21

26%

72%

67%

71%

76%

80%

Jul-21

12%

73%

7%

67%

78%

15%

Aug-21

7%

8%

4%

60%

77%

65%

Sep-21

6%

8%

4%

51%

76%

64%

Oct-21

4%

7%

8%

57%

79%

64%

Nov-21

12%

17%

23%

63%

77%

73%

Jan-22

4%

7%

7%

13%

66%

11%

Feb-22

15%

21%

18%

41%

55%

47%

Mar-22

32%

45%

41%

48%

45%

61%

Apr-22

36%

39%

42%

51%

50%

59%

May-22

48%

60%

55%

64%

63%

71%

Jun-22

49%

53%

55%

64%

65%

71%

Jul-22

38%

61%

52%

53%

71%

64%

 

 

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