"Death of the CBD"? Not exactly
The already volatile property market in Australia was, like most countries, impacted by hybrid and remote working driven by the COVID-19 pandemic. For starters, workers were ready to embrace the suburbs both for affordability and for the peace and quiet. And since workers were able to leave CBDs (central business districts) and work from home, many companies downsized their downtown office spaces. But now that restrictions from the pandemic are easing, some interesting things are happening. Here is everything you need to know about how hybrid working affects the property market in Australia.
Is hybrid working the new normal?
Yes—hybrid working appears to be the new normal, even as the COVID-19 pandemic begins to ease. The pandemic proved to employers especially that workers could be as productive or even more so working a portion of the week in the office and a portion of the week elsewhere, although the most common remote work is done from home.
This hybrid working model has led to a number of research studies on workers’ well-being and productivity. In the UK, for instance, data indicates that most employees would prefer to continue to work remotely even after offices starting reopening. A YouGov study found that before the COVID-19 pandemic, 68% of employees in the UK had never worked from home.
Most workers find that more flexibility has meant more productivity and even more job satisfaction, less absenteeism, a shorter commute (or none at all) and therefore a reduction of associated costs. For workers juggling caring for kids or older relatives, it has been even more advantageous. For employers, on the other hand, hybrid working has allowed for a decentralized talent pool as well as cost saving for office space.
How will hybrid work affect the demand for office spaces?
With fewer employees working in the office, there will be less of a need for larger office spaces for CBD tenants. This reduction in office size is already underway. Building owners will also see lower rents, which in turn will allow smaller companies and start-ups to take up these spaces in the CBD that they could not afford in the past.
This also has the potential to create a new wave of innovation in CBD, with entrepreneurs working in shared spaces with other entrepreneurs and creative professionals who worked before in more obscure areas all coming together in city centres. Already, independent workers renting out downtown spaces with other independents has opened the door for an ecosystem that is more robust for start-ups. In fact, these types of moves are what revitalise urban centres and draw newer ventures from a wider range of fields, such as culture and recreation, as well as leisure and hospitality.
“Death of CBD” claim is overstated
It is an overstatement to suggest the death of CBDs. It is true that it is going through a period of realignment, due in large part to hybrid work and even the burgeoning of online shopping, but that period is already nearly past, as the world returns to normal after the COVID-19 pandemic and its restrictions. Make no mistake—more and more Australians are returning to CBDs. A recent PwC survey found that 66% of respondents would still prefer to connect with colleagues and co-workers in an office or physical workspace of some form.
Flexible work arrangements are transforming “where we work”
It’s true. Due to more flexible work arrangements, where Australians can work is undergoing a major transformation—especially in the suburbs. For instance, in Sydney, commute times and workplace proximity have all but become obsolete, making the suburbs in Australia’s largest centre more and more appealing to differing levels of income. In fact, shortening commute times has been a priority for Australians for some time now, which has historically made accessibility to business hubs a key factor when calculating the liability rating of certain areas. With hybrid working becoming the norm, this has made suburbs not commonly thought of much more sought after.
This drastic change in lifestyle is pushing potential homebuyers to more appealing regional centres and smaller suburbs due to increased property sizes and, perhaps above all, affordability. Again, using Sydney as an example, regional areas around the city are becoming more attractive since job availability is less and less a factor, due to remote work.
But even more than that, the COVID-19 pandemic forced many Sydneysiders and other urbanites to live on top of one another without the reprieve of going into an office. It is no wonder more and more are seeking the quieter, greener pastures of the suburbs.
