Strong Confidence Despite Challenges for the Property Industry
Prior to the May/June lockdown, Melbourne CBD remained at 45% of pre-COVID occupancy levels – well behind other capitals. The benefits of bustling CBDs are significant, not just for the small businesses that rely on city foot traffic, but for the broader Australian economy.
Australia’s economic recovery since the shock of the global pandemic has been remarkable. We have now seen three consecutive quarters of strong economic growth and we have more people employed today than before the pandemic.
These figures have been matched by a near record level of industry confidence in the Property Council’s ANZ/Property Council industry survey, which have been driven by strong growth in residential and industrial.
Despite this positivity, symptoms of the pandemic remain of acute concern for the property sector. Our CBDs are still not fully reactivated, and our levels of overseas migration threaten our long term economic growth.
The Property Council’s office occupancy survey has tracked the rate of occupancy of Australia’s capital city CBDs since the height of the COVID pandemic. Results from May, taken prior to the impact of the recent Melbourne lockdown, found that the Melbourne CBD remained at 45 per cent of pre-COVID occupancy levels – well behind the other capitals.
Melbourne and Sydney have been the cities hardest hit by the COVID disruption and further corporate and government leadership is needed to encourage workers back to the office to bolster this recovery.
In May, the Prime Minister delivered a clear and welcome message to government and private sector employers: that it is “time to get back to the office.”
The benefits of bustling CBDs are significant, not just for the small businesses that rely on city foot traffic, but for the broader Australian economy. Our two biggest CBDs – Sydney and Melbourne – each contribute around 7 per cent of national GDP.
Flexibility will continue to be a strong feature of working in the post-pandemic world, but the current levels of occupancy are not sufficient to support Australia’s broader economic recovery.
Building owners and managers are not waiting for government leadership to drive CBD reactivation. Through Property Council coordination they are proactively making the case for workers to return to their offices and reengage with all the benefits of face-to-face working.
In Melbourne, the Property Council has launched FOMO Fridays in conjunction with the City of Melbourne and the Australian Retailers Association. In Brisbane, the Fridays in the City initiative is bringing together reactivation efforts in partnership with Brisbane City Council, the Queensland Government and other CBD stakeholders. Similar initiatives are in development in other capitals.
Friday initiatives have seen an abundance of exciting activities to draw people back to CBDs, including free coffees and donuts, happy hours, live music, prize giveaways, discounted parking and even tarot card readers. We are already hearing reports of an increase in foot traffic, uptick in office occupancy and a boost in revenue for retail traders and hospitality venues off the back of these campaigns.
The Property Council has welcomed the National Cabinet’s referral of current office physical distancing guidance to the Australian Health Protection Principal Committee for review. We need to make sure that physical distancing guidance is clear and appropriate to the current risk profile and not creating an unnecessary or confusing hurdle to workers returning to full productivity.
Another key area of concern for the industry is Australia’s stunted population growth. Last year Australia experienced its first population decline since the First World War.
Population growth is not an optional extra for Australia’s economy. Without it we cannot sustain our economic success over the long term. If safe immigration is not resumed until well into 2022, Australia risks losing ground to our competitors as students and high value workers take other opportunities.
We need solutions to our population problem and this cannot wait until after the vaccine roll-out. The Property Council has been advocating for a strengthened, expanded and higher capacity quarantine process which will enable Australia to resume net overseas migration in a COVID safe way. Australia can choose growth and still stay safe.
The Property Council has been encouraged by the announcement of Federal Government capital support for the Victorian Government’s planned quarantine facility and a renewed focus on the reactivation of Australia’s CBDs. Construction is expected to commence in September with the facility planned to have an eventual capacity of 3,000 beds.
This investment will not only provide a more secure quarantine system, but also enable an upscaling of Australia’s intake. The property industry would welcome consideration of other innovative solutions such as quarantining in student accommodation, home quarantine for returning Australians, and broader use of technology.
Innovation has been a hallmark of Australia’s resilience through the COVID-19 pandemic. After a year of remarkable innovation, by policymakers and industry, we need to continue to be flexible to new solutions to our economic challenges.
Written by Ken Morrison