A 2021 survey on the future of office shows why the pandemic has done much less to impact occupier sentiment that many pundits have feared since 2020.
The future of office in Australia has been questioned by property stakeholders since the pandemic first shook the real estate sector in 2020. This is because little can be predicted based on an unprecedented environment the office property industry finds itself in.
But in lieu of a crystal ball, much can be ascertained about the potential future of a particular environment by gauging the sentiment of the major players operating in it.
In September 2021, commercial real estate goliath CBRE released the results of a survey of 109 businesses with a substantial Australian office portfolio. The survey’s goal was to better understand the corporate world’s thinking around the future of their office occupancies.
The results, which were measured against the shadow of a similar survey in 2020, represent a significant improvement in the overall attitude toward the future of office property in Australia.
Here are three of the most positive findings.
71% believe an economic recovery is underway
Australia’s economy grew 9.6 per cent in the year to June 2021 and the annual unemployment rate dipped to 4.6 per cent as of July 2021.
These and other positive economic indicators have led to a surge in business confidence toward Australia undergoing an economic recovery, with 85 per cent of Australian respondents indicating they expect to soon see better business conditions (as at May 2021).
In comparison, only 28 per cent of those surveyed in a similar CBRE survey in October 2020 had bright eyes on the future of the economy, meaning business sentiment has seen a massive improvement across Australia (and the wider Asia-Pacific region, with 71 per cent of APAC respondents reporting improved business conditions).
There can of course be some skepticism about how accurate these early-2021 responses are, since the recent lockdowns that have spread across the east coast. However, CBRE Research tips the optimism should remain as Australia marches toward its coveted 80-per cent vaccination rate target (forecasted, with perhaps a hint of optimism, to be achieved by Christmas).
47% of business leaders support hybrid working
CBRE says the biggest shift from last year’s survey is that business leaders are offering more flexibility for their returning office workers.
Almost 47 per cent of respondents plan to implement policies allowing office-based working with the option of working from home.
Meanwhile, a quarter of respondents want their staff working in the office all the time and, as a pleasant indication for office property landlords, a mere 10 per cent of respondents will consider a fully remote working arrangement with their staff (up from 9 per cent since October 2020).
Flexible work arrangements are expected to have little negative impact on the future of office space demand.
50% will add office to their portfolio in the next three years
Many occupiers expect the size of their office portfolios to increase in the long-term, with half of the respondents intending to increase their exposure to office real estate over the next three years.
This is seen as a huge increase in the mere 23 per cent of respondents who provided the same answer in October 2020. Since this time, we have perhaps had a great deal of uncertainty removed about the future of office, perhaps due to the realisation that the changes in the office environment that doom-and-gloom theorists first projected simply have not occurred.
Offices are seen as a major tool for collaboration, communication, and innovation for businesses. Without a central office location for their workers – and with the sole reliance on the sterile nature of Zoom meetings – the cross-department collaboration goes out the door for these occupiers.
If you’re an office landlord, or considering adding an office asset to your portfolio in the coming years, you would do well to secure office space with increased sustainability and consideration of employee comfort. Surely, there has been no greater driver for businesses to implement robust initiatives to buoy their employees’ workplace wellbeing.
Not sure where to start with an office property investment? We’re here to help.
Properties & Pathways is a dynamic commercial property investment company. Our completed syndicates have provided investors an average annualised return of 19%. For more information on how you can invest alongside us, get in touch today.
Subscribe for investment updates
Join hundreds of fellow property investors by subscribing to our Investment Updates. We’ll show you insights you won’t read in property publications, direct from the commercial property experts that have helped provide our investors with an average annualised return of 19% p.a.