Property Australia

The CBD reactivation challenge

Karen Jamal Karen Jamal June 15, 2021

The Property Council’s latest office occupancy survey tracks the return of workers to the CBDs, as Investa’s new research finds 73% of office-based businesses still want central locations.

The Property Council’s monthly survey of building owners and managers, taken prior to the impact of the current Melbourne lockdown, has pegged the Melbourne CBD at 45 per cent of pre-COVID occupancy – well behind the other capitals.

Occupancy in Sydney’s CBD rose to 68 per cent of pre-COVID occupancy, while all other CBDs recorded relatively consistent numbers of workers returning to their offices.

Property Council chief executive Ken Morrison says, while Sydney has largely caught up with other cities, Melbourne remains a cause for concern.

Once the current lockdown has concluded, there will need to be a redoubling of efforts to return the Melbourne CBD to the vibrant city centre that it was prior to the pandemic.”


Office occupancy by CBD



*Note: 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.

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 CBD reactivation, this data is now 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%”.


CBDs firing on all cylinders

The Property Council has welcomed the prime minister’s message that it is “time to get back to the office”. The review of physical distancing guidance by Australian Health Protection Principal Committee is also welcome news, Morrison says.

“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.”

Almost half of survey respondents identified worker preferences for greater flexibility as the main barrier to full occupancy.

Morrison agrees that flexibility will remain a “strong feature” of the workplace but says current levels of occupancy are not sufficient to support Australia’s broader economic recovery.

“Our CBDs support millions of jobs and generate hundreds of billions of dollars in economic activity. We need them firing on all cylinders.”

The property industry is enticing 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, Fridays in the City 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,” Morrison adds.

“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.”


Investa’s office market insights

Research published by Investa found a central office location is the most significant driver of office choice for 73 per cent of office-based businesses.

Furthermore, half of office-based businesses intend to increase the amount of collaboration space in their workplace.

David Cannington, Investa’s head of research and strategy, says the survey of Investa’s office tenants is “a reflection of the people who are primarily responsible for making the accommodation and property decisions for Australia’s office-occupying businesses”.

Businesses are planning to incorporate a range of flexible work options, as Investa’s survey of office tenants found employers expect their people to work from home 1.9 days per week on average.

But most businesses are looking to maintain their existing office space commitment as they consider the future economic and business environment.

Cannington says the findings suggest the workplace is “undergoing a continued phase of evolution, not a revolution”.

“Our survey findings highlight the importance of a central office location and business agility, combined with engaged employees to drive strong business performance in the long-term,” Cannington concludes.