Canberrans skipping the office to work from home has repercussions on the city's commercial real estate market, property leaders have said.
Some are confident about demand for offices in the future while others point to for-lease signs across the city.
Although the number of offices available for lease increased in the first half of 2023, latest data shows Canberra had the second-lowest vacancy rate in the country. The office market continued to grow as the vacancy rate fell from 8.9 per cent to 8.2 per cent in July 2023.
It's old versus new
The council's ACT and capital region director Shane Martin said the private sector along with federal and territory governments were still looking to lease new office spaces. While demand is on the rise, he said many office spaces in Canberra were "ageing stock".
"Something like 47 per cent of our offices are grade C and D, which means they're ageing and not state of the art," Mr Martin said.
"You've got situations where government tenants or other tenants want to move out of those kinds of ageing office stocks and into the newer ones. Just take the Department of Agriculture that moved into the city early this year."
Colliers national director of development and government Paul Powderly said demand for office spaces varied depending on their location in the ACT.
He said town centres in Barton and the city were attractive to tenants while those in Belconnen and Tuggeranong had relatively low demand.
Mr Powderly stood in front of the red building at Belconnen's Benjamin Offices where the Australian Media and Communications Authority offices had been for a decade. The authority moved out of the 5384 sqm office just before Christmas to a smaller space near the University of Canberra.
Vacancy rates could go up
Mr Powderly also believed the impact of flexible working on the office market wouldn't be fully felt until 2025 or 2026. He suspected demand would decrease as more modern office buildings become ready for use.
"I think it's a short to medium-term, low vacancy rate," he said.
"Unless the federal government expands dramatically, then this new supply will basically see people move from older buildings to new buildings, and we'll see an increase in the vacancy rate."
High-quality offices for the win
A survey of 1000 workers by COS, an Australian office products company, revealed 37 per cent of their offices had changed since the pandemic.
Almost 40 per cent of employees who returned to a newly redesigned office said they found it more "enjoyable" and "productive". The pleasing changes included increased open plan designs (44 per cent), bigger offices (35 per cent) and more collaborative areas (28 per cent).
A fancy new office development on the corner of Vernon Hill and Constitution Place is being led by the head of property at Canberra Airport Group Richard Snow.
Mr Snow said it would house high-quality office spaces perfect for expanding businesses. The developer had no doubt it would be a coveted location once it's completed in 2026.
"Some of the organisations [in Constitution Place] have the highest utilisation of anywhere in Australia," he said. "It's because it's a new workplace, it's an interesting place, it's got cool amenities, the ability to ride to work, take public transport, cafes, restaurants, gymnasiums.
"All those things combined, the package is really attractive."
In his experience, vacancy rates in A grade office spaces were very low compared to older buildings. Mr Snow said it was C grade stock that would possibly experience vacancies in the future.
"I think there's always going to be demand in our view for good quality office accommodation," he said.
Effects on hospitality and retail
Mr Powderly said the move towards the work-from-home trend was a "double-edged sword". While it allowed workers to be flexible and save costs, there had been major consequences for shop fronts.
He said government offices needed to be at least 80 per cent occupied to be able to sustain such businesses, but said the numbers were much lower.
An analysis of the APS census undertaken by The Canberra Times showed about 80 per cent of workers had flexible working arrangements.
Mr Martin felt bleak about a number of empty spaces in the CBD which could be home to businesses catering to office crowds. He said the demand for coffee shops, lunch spots and entertainment venues felt stagnant.
"There are still areas of commercial office space where effectively no one's using it," he said.
He wanted to see those spaces transform into trendy bars and restaurants to improve the nighttime economy. In cases where business owners did rent out such spaces, Mr Martin said they were likely hit with a lease variation charge (changing parts of a lease to allow new activities).
"If we could remove those barriers, we could start to see the commercial assets being used in really inventive ways to rethink the way our city does business," he said.
