The previous two years have been tumultuous for Australia’s office sector. Various lockdowns and work-from-home orders saw vacancy rates skyrocket, resulting in a loss of income for both tenants and landlords. As Australians slowly emerge from the pandemic and return to the office, this year will likely see greater stability and consistent income for the office sector.

Vacancy rates have risen and fallen throughout the past two years in line with various lockdowns and work-from-home orders. Re-Leased data reveals the average lease length of Australian office properties has increased from 2.11 years in August 2021 to 2.37 years in February 2022, demonstrating a healthy recovery for the office sector.

The Omicron wave dampened a total return to office, with many workers choosing to remain working from home for health and safety reasons. However, now that most work-from-home orders and mask mandates have been lifted across the country, workers have tentatively begun returning to the office, which has increased occupancy rates and helped landlords receive a stable income once again. The Property Council of Australia’s Office Occupancy Survey revealed office occupancy in Melbourne’s CBD has doubled in March, with occupancy levels sitting at 32 per cent, the highest since May 2021.

With more workers now choosing to venture into the office, occupancy has begun to rise and is predicted to increase throughout this year as workers feel more comfortable working in the office.

Hybrid working has become a hot topic of discussion for employees and employers following numerous work-from-home orders throughout the pandemic. The pandemic has awoken a desire among many Australians to work from home either fully or partially, which employers are feeling the pressure to accommodate.

As Australia moves away from lockdowns and work-from-home orders in 2022, many employers are finding they must remain flexible to remain competitive, or else risk losing staff. Landlords, too, must be accommodating with flexible leasing strategies or risk long periods of vacancy and loss of income and business.

With hybrid working now increasing in prevalence, employers have recognised the importance of integrating premium features into office spaces to attract employees back to the office, even if they do have hybrid working policies. For example, tech giant Atlassian holds a “Team Anywhere” policy, giving staff the freedom to work from anywhere and to set their own schedules; they do not need to ever step foot in an office again, if they so choose. Despite this, Atlassian has recently invested in a new Sydney headquarters building boasting premium materials and sustainable features such as open-air wellness spaces and the use of mass timber. In doing this, Atlassian hopes to incentivise workers to return to the office on their own terms by providing premium facilities and office spaces.

The pandemic has also shaped consumer desires regarding what workers expect from office spaces and their employers. With more attention now paid to limiting the spread of viruses in the office, workers and employers are interested in creating COVID-safe spaces, meaning socially distanced desks, greater air circulation and ventilation, and the option to work from home.

Moreover, employers are facing rising pressure to address environmental, social, and governance issues in their offices and policies. Buildings that are inclusive and accessible for all workers have become more prominent in the industry, with popular features of new office buildings including prayer rooms and gender-neutral facilities.

Sustainability has been growing in relevance over the last few years within the commercial real estate sector, and is expected to continue increasing in importance throughout 2022. Many developers have begun to install sustainable features such as solar panels and electric heating throughout their new builds, and a standard of net-zero operational emissions is becoming increasingly more popular with new developments. These features have started to become the industry standard for new builds, as developers need to match competitors within the industry in order to secure tenants and business. A JLL study revealed net-zero properties will soon be the industry benchmark for the commercial real estate sector, and property managers are rushing to “future-proof’ their assets to keep up with the industry and align with consumer desires (JLL, Australia and New Zealand real estate investment themes for 2022).

The office sector has been hit hard throughout the past few years but is bouncing back well from low occupancy rates. With Australia moving away from work from home orders, the future of office is looking brighter, greener, and more inclusive.