There is no mistaking the difficulty across the CBD office markets in Australia, notably Sydney and Melbourne, with prolonged high vacancies of 11.5 per cent and 15 per cent respectively which are not tipped to improve quickly. These rates are the highest recorded since the late 1990s and the combination of high supply along with continued limited demand to occupy stock hampering any recovery. Raising the question of what needs to be done to promote staff back into the office and businesses to commit to accommodation to suit a growing full-time work force?

The prolonged historically low 3.7 per cent unemployment rate is a stumbling block for many businesses, the lack of quality talent leading to employers having to provide greater flexibility to secure quality staff. Hybrid working models allow remote working, be it from home, in regional areas or even interstate with limited need for “in the office” interaction continuing to be commonplace. For many businesses, the opportunity to see cost savings on their accommodation, have seen some reconsider their space requirements. Also given the high vacancy environment and elevated incentives, the flight to quality continues, with many businesses opting to relocate to prime quality buildings to lure staff in, however many are consolidating their desk needs opting for more flexible, collaborative and hot desk solutions rather than traditional fixed work stations within the same or smaller footprint.

While office owners and employers are doing their bit to encourage staff interaction in the office by way of perks and experiences such as massages, pilates classes, free cannolis and iced lattes, occupancy levels remain subdued. Now Transport NSW has weighed in, Sydney’s public transport prices are set to increase next month, weekly caps however have remained unchanged and Friday is now considered a weekend! Providing off peak fares to all travellers across the network. Be it to encourage staff in, or activate the evening entertainment scene, overall monthly transport statistics show a decline across all modes coming in and out of the Sydney CBD. August 2023 recorded 18 million trips which is down 28% compared to a pre-COVID August. Data from Property Council Australia regarding office occupancy collected during the pandemic, showed a strong correlation to these transport statistics, suggesting that current occupancy rates sit between just 50 per cent and 60 per cent given this current public transport usage level.

For those opting to drive into the CBD, casual parking rates continue to show substantial discounts on pre-COVID rates and early bird prices have been falling making it an attractive flexible option to those not always in the office. In the recent NSW budget, a toll cap will also add to the attractiveness of driving in, commencing 1 January, tolls in excess of $60 per week can be claimed back, encouraging more back on the road and into the office. 

A four-day week is not as crazy as it sounds, the UK did a trial last year across 61 businesses, reducing working hours to four days per week, but maintained productivity and paid staff a five-day wage. The findings saw 92% of businesses herald it a success and many have implemented the permanent change due to their staff being happier and performing better at work. Berlin is set to commence their own pilot next year seeking to reduce stress and burnout and reduce sick days taken across the German workforce with public administration staff first to trial.  It is acknowledged that this may not be a suitable solution for all business types, but it raises the question, could it be the game-changer for the poor performing Sydney and Melbourne CBD office markets?

The mandating of staff back into the workplace for a four-day week, would do much to stimulate the office market's demand for space, while promoting better work/life balance, reduced stress and growth in health benefits.  Leaving the three-day weekend to explore Sydney on public transport at a discounted rate, or travelling across toll roads, growing family time and healthy lifestyle habits.