As daily occupancy across Melbourne CBD office towers slumps to all-time lows, major corporate tenants will consider within weeks whether they give up space permanently, with more staff expected to work from home more often.
State government directives to work from home if possible have sent occupancy to as low as 5 per cent across Melbourne city offices, according to figures collated by commercial agency JLL across the portfolio of office towers it manages.
In Sydney and Brisbane, where restrictions have eased, occupancy was around 20 to 30 per cent by the end of last week.
The decision by National Australia Bank this week to mothball two entire Docklands buildings, leaving just a skeleton crew in place while other staff consolidate into a third tower on Bourke Street, has sharpened minds across the corporate sector on how much space needs to be occupied over the longer term.
Sub-lease availability – the amount of space large firms offer back into the market as they contract – has been at historic lows for the past six years. It has surged 112 per cent in the last six months, with almost all of that gain in June alone.
Leasing market veteran Stuart Colquhoun, of CBRE, said the full extent of sub-leasing space may not be apparent for several more weeks, as firms regain access to their buildings and map out exactly how they will run their workplaces into the future.
“There’s anticipation that we’ll see some reasonable-sized tranches come to the market. Because everyone is still working from home, businesses are still yet to declare their hands.”
While the state battles to bring viral outbreaks in suburban hotspots under control, Premier Daniel Andrews has extended the ban on returning to office work through July. The course of the pandemic remains uncertain in Melbourne, and some fear a return to CBD offices may not be feasible this year.
Illustrating the difference between Melbourne and Sydney is major power and gas supplier AGL Energy, which has set vastly different schedules for a return to work for employees in the two cities. Melbourne workers are only set to return on August 3, while Sydney employees will begin filing back to the office as of next Monday.
Until August 3, only a small number of essential staff will continue to work in the Melbourne office, with all employees having their temperature tested on the way in and out, a spokesman said.
The energy supplier is just one of a number of blue-chip tenants that have flocked to the large floor-plated, campus-style buildings developed in Docklands. Other big names in the waterside precinct include ANZ, Commonwealth Bank and KPMG.
“Data from our pedestrian sensors shows COVID-19 pandemic has hit Docklands hard, with far fewer workers coming into the area each day. This has huge flow on impacts for cafes, restaurants and bars,” Lord Mayor Sally Capp said.
Across the CBD overall, foot traffic dropped by 90 per cent during the first weeks of restrictions. It has since improved, although it is still down by about two-thirds. In the heart of Docklands this week one sensor showed pedestrian traffic down 87 per cent, while another showed it has fallen 47 per cent.