Workers Have Spoken! Can we go back to the Office now Please

Workers Have Spoken! Can we go back to the Office now Please

It seems that the Property Sector is set to feature for quite some time as it dominates the headlines in the post-pandemic world where the future of the office front & centre for businesses and real estate investors.

As Martin Kelly reported this week in the AFR, the shoppers have returned to suburban bricks and mortar retail with traffic in Scentre Group’s Westfield centres ahead of the pre-COVID average.

The surge will encourage those shopping centre owners and managers who three months ago confidently predicted a solid retail return based on the post-lockdown performances in the past year.

Google became the latest major company to announce another delay in its return-to-office plan, pushing its reopening date to January 2022. Most recently, the tech giant planned its return for October, which was a delay from September, which was a delay from July 2021.

Companies including Apple, Amazon, Facebook and Starbucks already announced postponements with similar timelines, and more employers are expected to follow as the U.S. heads into the fall with the delta variant spreading throughout much of the country.

London and New York have, after a summer lull, regained some of their pre-pandemic bounce. Broadway has reopened, and the yards and alleyways of the Square Mile are once again thronged with financial workers. Neither city may be as busy as it was before the pandemic—but recovery is in sight.

This reluctance doesn’t mean they won’t resume working and meeting with colleagues in person, but it does mean that a transition period is likely in which they may exhibit variability in their energy, attention, and emotional control. They may seem fine at one time, and then uncertain at others — sometimes on the same day.

Some of the Hurdles and Issues Regarding the Return to the Office include:

1. Employers are to “allow staff to continue to work from home, if reasonably practicable”. Staff who are not vaccinated are required “to work from home, if reasonably practicable”.

2. Those who have returned to the office have overcome other hurdles. They have to wear masks at their desks, they have to negotiate public transport, and those with children still don’t have them back at school.

3. Managers face additional challenges. Most organisations still have to negotiate the vexed issue of what to do with the unvaccinated.

4. Several major office occupiers are leading the way with “no jab, no office” policies including law firm Gilbert & Tobin, and Deloitte with its 10,000 staff.

5. Other managers, wary of a further wave of COVID-19 cases following the reopening of Sydney, have split their teams to avoid closing the office altogether in case of an infection.

6. Management issues such as ventilation, lifts and spacing were not mentioned to me this week.

7. Office towers have an emerging labour shortage in the army of cleaners who move through the buildings in the evening. “We are not struggling, our labour retention rate is 96 per cent, but others are,” said BIC Services chief executive Tony Gorgovski, who has a Sydney CBD team of almost 900 cleaners.

Today’s graph from the Property Council shows how the latest lockdowns have emptied the CBDs, with occupancy at 4 per cent of the pre-COVID level in Sydney in September and 6 per cent in Melbourne.

“We expect declines to moderate from here, given reopening,” Macquarie Research wrote. “However, upcoming supply will offset demand recovery, resulting in limited material improvement.”

Investors seem to have come to terms with that future, both in the short term and long term. This year the quantum of office transactions – $15.5 billion in the nine months to September, according to Real Capital Analytics – is up 88 per cent in 2020 and has returned to the average for 2015-19.

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