New Hybrid Working Arrangements – What That Means For The Office Buildings

New Hybrid Working Arrangements – What That Means For The Office Buildings

Read time: 4 minutes, 27 seconds.

We’ve been saying for years that we spend too much time in the office. Then when the pandemic hit in 2020, we were forced to try and do more from home including our office work. Many people and companies took a while to get adjusted to the new situation but in time, the raving reviews started to roll in. In a few months, both companies and employees started to see the benefits of working remotely.

You don’t have to wake up so early. You have zero commute time. Many companies saw more productivity from employees. Plus, the costs of maintaining a physical office space were reduced if not completely removed. After realising how much could be done remotely, companies gave the option to work remotely for the long term or permanently.

“When you challenge the conscience of nine to five, Monday to Friday and you take away the need to physically be in an office to do work, you can access a way bigger and way more diverse talent pool.”  – Dominic Price, Work Futurist

What Is The Hybrid Workplace?

While the work-from-home model is still in full stride, there are still some areas of business that would benefit from physically meeting in the office. This is where the hybridization of the current workplace comes into play. 

A hybrid workplace is a working arrangement that allows more flexibility for how and where you work. So that would mean that employees of a company would have days or times that they can work remotely or from home. Then there would be other times that they would come into the office. This could either be by choice or based on the responsibilities that come with their role. 

Recent research shows that most people would prefer to at least have the option to work remotely. A whopping 77.7% of the people who participated in this research would be more comfortable with the hybrid approach to the workplace. The truth is that, since the pandemic, more people have started to realise that a work-life balance can be achieved. All that was needed is more flexibility on the “work” side of things.

Australia’s financial community has already taken the step to adopt the new hybrid workplace model. The Commonwealth Bank, ANZ, National Australia Bank, and Westpac have already embraced this approach. Australia’s Big Four are already encouraging their employees to change how they think about needing to come into the office.

What Does This Mean For The Office Buildings?

In 2019 alone, Australia’s central business districts accounted for roughly 12% of the nation’s economic activity. With the pandemic, there have been whispers that areas like these that host office spaces are soon to be outdated. Some businesses are indeed reducing the amount of floor space they commit to. While that is true, it does not mean that the office spaces will have to be left vacant. Instead, it is opening up the space for new businesses.

Now that many established companies are letting go of some of their physical office spaces, newer and smaller companies can access them. To be honest, before the pandemic, not a lot of startups or small business owners could afford to get office space in the central business districts of the countries leading cities. 

Now, though, the rent on these office spaces has gone down. So now smaller companies can reach the barrier of entry to get in. In June of 2021, the sublease availability in the major cities got as low as 374,604 square metres. This shows a drop of 10.7% in sublease availability between the first quarter and the second quarter of 2021. When you narrow it down to individual cities, Sydney alone experienced a sublease drop of 28.8% between the first and second quarter of the year. While Perth saw a 14% decrease and Brisbane had a reduction of 12.6%.

“The sublease market is not only a good barometer for the health of the property market but the economy more broadly. To see Sydney’s sublease space drop so sharply over the first half of 2021 is very encouraging.”  – Mark Curtain, Head of Office Leasing – Pacific, CBRE

Going forward, building owners and building managers can expect lower rent prices because of workplace hybridization. With lower rent prices, you can expect to see more entrepreneurs entering the central business district space. This type of shift in the environment will usher in a new wave of businesses in urban areas. Many innovative building owners will start to reinvent the office spaces. Starting with decor, you can make your office space more attractive and reflective of the hybrid model.

If you are a start-up and looking to find yourself a space in the city, MLS Finance has a team of agents that may have the perfect office space for you.  

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📩 Email: enquiries@mlsfinance.com.au

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