Melbourne CBD Office Building Occupancy Levels are Down, However a Carefully Curated Office Experience, will Bring Employees Back.

Workers in CBD office buildings demand a hybrid approach to work

The data is in!  It’s a resounding "yes" to changes in CBD office building occupancy rates, as the move from Mon-Fri 9-5pm changes in favour of a more hybrid work from home arrangement, post-COVID.

As an office worker myself, I can relate to and empathise with the workers in the CBD.

I’ve spent a few thousand dollars on my remote setup and have tracked the time gained from mobile meetings vs office meetings, seeing a 20-30% increase in productivity while working from home. Working remotely has definitely changed the way we think about work and our work life balance.

With that said, I believe most people miss the office and the camaraderie it brings. There’s nothing quite like working closely with our peers for some quick validation, inspiration, team chats and face to face problem solving. Our offices provide the means to achieve this, so what’s the right  home/office mix, coming out of lockdown?

At propella.ai, we’ve analysed pre-covid and during covid occupancy levels, and generated some interesting insights into how we believe the CBD office of late 2021 and beyond will look.

Tuesday, Wednesday, Thursday (TWT) remains the preferred “in-office” work week

We gathered office occupancy data from over 40 of the major CBD buildings across Melbourne, and used our propella.ai tool to generate key insights into how workers are moving around the CBD on a daily basis.

As the data shows, office occupancy levels are low as one would expect during and directly following a pandemic.  Weathered lockdown Melbournians have become accustomed to staying away from the office and working remotely since March 2020.

Melbourne city workers were consistently in the CBD more often on Tuesdays, Wednesdays and Thursdays (TWT herein), which has been a trend in the Melbourne CBD for some time (see Figure 1). So despite the low office occupancy levels overall post-COVID, the TWT trend remains. The data also shows that office building occupancy levels decreased most from Pre-COVID levels on Mondays (see Figure 1).

Since the start of October 2021, we have been keeping a close eye on how this TWT pattern is unfolding along with key data points for city workers returning to their offices to gain insights on what the new “normal” will look like in a post-pandemic world. Stay posted for future articles on this as trends emerge.  

As the rest of the world wakes up post pandemic, we are starting to see similar trends overseas with one American study showing that when it comes to working remotely “87% (of workers) would like to be able to do so at least once a week” with “Over 55% of workers would like to work remotely for a minimum of 3 days per week once the pandemic is under control”. [citing article - 10 Surprising Return to Work Statistics - Uncertainty and Resistance - Ergonomic Trends][A1] 

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Caption - Figure 1 - Melbourne CBD Office Occupancy by day of week. Pre-COVID vs COVID levels

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Remote workers need enticing back into their office buildings

It’s clear that work and our work habits have been altered due to covid, but how much so, time will tell. However, what is certain is employee attitudes in returning to the CBD. Employees are demanding a more flexible experience and along with that comes a more flexible office space.

As stated by Antony Slumbers (Co-Founder at Real Innovation Academy) “At a macro level demand for office space will decline. Historically we never used office space very efficiently, or effectively…. Overall, per person, core office space is 100% certain to be in less demand. You cannot move from a five day week to a two or three day one and not expect change.” [citing article - https://www.linkedin.com/pulse/twenty-trends-post-covid-real-estate-antony-slumbers ]

We imagine this means that larger enterprise tenants will consume less space, while at a micro level the demand for more functional space will increase. Antony suggests the same stating that “At a micro level, demand for space will grow. The point is that the right type of office space, operating in the right type of way, will be in high demand. Very high demand. Because there will not be all that much of it. Space that catalyses human skills, and is managed and operated with a keen understanding of the wants, needs, and desires of customers will thrive. Really thrive. Because it will enable people to be unusually happy, healthy AND productive.” [cite article - https://www.linkedin.com/pulse/twenty-trends-post-covid-real-estate-antony-slumbers ]

This seems congruent with how startups and early-stage funded businesses are consuming their office space now.  In Melbourne alone, startup and hyper niche spaces go for a premium – whether it’s CLIK Collective (offering specific space for e-commerce businesses) or Creative Cubes, The Commons, The Cluster or WeWork, every space offers something unique that can be replicated and improved upon in larger office buildings that now have space free (let go from large tenants).

But how do Office Building Asset Managers know what will be valued and appreciated by their tenant's employees? Apart from time-consuming surveys, the best way to predict what will draw workers back into the office is to analyse the demographics and psychographics building workers.  This helps us understand workers' preferences, which can then be used to help create a remarkable experience for city workers, who then will hopefully choose to come to work in your building for 3 days a week, rather than working from home. 

Increasingly, employers will need to “earn the commute of their people”, as mentioned in the AFR recently. (cite article -https://www.afr.com/politics/federal/employers-need-to-earn-the-commute-of-workers-20210330-p57f7o)  Organisations will have to create a unique, carefully curated office experience to draw their employees back into the office, otherwise, they will choose to work as much as possible from home.

Office buildings now require very careful curation to drive occupancy

While it's no surprise that building occupancy levels are well down on pre-COVID levels, it is interesting to note the pattern that Tuesday / Wednesday / Thursday remains the favourite work-from-office days. Also interesting is that it appears that Monday is the 'new Friday' - occupancy rates are just as low on a Monday these days as they are on a Friday (which has generally always been the quietest day in the office).

Office Asset Managers will need to deeply understand their tenant clients so they can create compelling reasons for them to come back to the office. Appropriate installations, curated events, innovative marketing and a unique and employee-aligned space will all help create the type of environment and community that will help drive occupancy rates, and therefore long-term asset value.

propella.ai is at the forefront of providing data-based Building Occupancy Reports for Office Asset Managers. If you'd like to learn more about how this could help your organisation, get in touch today @ www.propella.ai/contact

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