Employers Push For Work From Home Staff To Return To Office As Commercial Property Values Plunge

Life. Money. Power. Control. Home.

Everything is colliding for employees, bosses and the owners of commercial properties as the “work from home” trend cements itself as a standard part of most office workers’ lives.

Key points:

• Office workers are slowly returning to offices, as employers rent better space with more lavish facilities
• Work From Home is now cemented as a regular part of office work, although the number of days per week varies
• Sydney CBD office occupancy leapt from 49 percent to 75 percent in a year. Melbourne is at 56 per cent

Some bosses are having their bonuses linked to being in the office — and getting their employees there too.

Meanwhile, “work from home” is the most popular term people are searching for when looking for work online.

Office occupancy statistics diverge depending on the city, with even those not as affected by COVID lockdowns still seeing empty desks.

“Things like this don’t usually change so quickly in the labour market,” notes Matt Cowgill, senior economist for jobs website Seek.

“The shift from agriculture to manufacturing to services … they typically happen over the course of decades. Whereas with ‘work from home’, we’ve gone in just a couple of years from very, very few people working from home to a substantial minority of Australian workers. 

“We have been through a big shock. It’s been a huge change.”

About 60 percent of workers are unable to work from home.

They need to be physically present and on the tools to perform their job.

But a huge swathe of Australian workers can do at least some of their jobs from home, the most obvious being desk-bound, computer-linked office workers.

They’ve taken to the shift — powered by COVID lockdowns and mandated periods of staying home — with gusto.

But it might be starting to unwind.

Bonus Link vs Work From Home

In Australia and overseas, some companies have started linking the bonuses of executives and employees to the amount of days they spend physically in the office.

ANZ staff face a cut to their annual bonuses if they don’t spend at least 50 per cent of their scheduled working hours in the office, according to a report in the Australian Financial Review.

The bank has previously stated it has an expectation its staff will spend at least half their working hours in the office unless they have a formal exemption.

The Commonwealth Bank has a similar obligation. Origin Energy reportedly demands all employees based in an office spend at least 40 percent of their time there and has started linking attendance to performance reviews and bonuses.

‘In your interest’

ANZ chief executive Shayne Elliott is a big believer in being back in the office. He told networking site LinkedIn that hybrid work was here to stay, but that remote work five days a week was not sustainable.

“It’s not about being in the office. It’s about being with your team.”

The Big Four bank is based in Melbourne, which suffered the longest COVID lockdowns of a major city in Australia.

Office occupancy rates remain lower than in other Australian capital cities.

“Almost everything we do relies on teamwork, relies on people collaborating, sharing ideas, doing things together — not just in their team, but with an adjacent team as well. And it’s proven that collaboration in general works much better when you’re actually in the room,” he told the site.

Office attendance will boost your career, he noted.

“Don’t think you are doing it for me. This is in your interest. This is how you learn. This is how you get better. This is how you build your skills. This is how you observe others.”

In the UK, The Times reported that banking giant Citi told employees based there to come back to the office.

The bank warned that bonuses — which are a substantial proportion of some salary packages in the financial services field — could be docked if workers failed to turn up at the office for least three days a week.

Occupancy question

Employers are changing how they go about luring back office workers who got used to a living-room-to-study commute. 

Tom Broderick, head of office and capital markets research at property giant CBRE, says the request to return to the office is moving from asking to telling.

“What we’ve found is that organisations started off with a ‘soft touch’ approach,” he says.

“They might have been offering free food or free coffee to come back into the office.

“But now the larger organisations are pushing a bit harder. So they’re linking bonuses.

“They’re also mandating days in the week that people should be coming back.”

Businesses want people back. But not every worker is listening.

Slow burn return

Research from CBRE shows the slow and uneven return of workers to offices in our major cities.

Average office occupancy in the third quarter of 2023 was as low as 56 percent in Melbourne. 

But it’s an outlier. Perth was at 91 percent, Adelaide at 85 percent, Sydney and Brisbane both at 75 percent.

And peak days — generally Tuesday to Thursday — see occupancy rise anywhere between 3 and 7 percentage points, according to CBRE’s figures.

“Nationally we’re finding Tuesdays to Thursdays that offices are probably sitting at 75 to 80 percent, on average, of pre-COVID levels.”

Friday is “by far” the quietest day in Australian offices, at only 60 percent, nationally, of pre-COVID occupancy levels.

Cities like Perth and Adelaide are getting pretty close to pre-COVID levels of occupancy and are probably close to their peak, Mr Broderick says. 

“We’ll never go back to full-time in the office,” he says.

“I think a market like Melbourne will probably improve the most over the next 12 months, particularly with the larger corporates kind of being a bit harder-lined in terms of how many days a week you should be in the office.”

Top term

A key part of the issue is that many employees have a preference for working from home.

“Since COVID, ‘work from home’ has consistently been the number one search term on Seek,” Mr Cowgill says.

The term is searched more often than any industry or even any role.

“It used to be that people go on and search for ‘administrative assistant’ or ‘retail job’ or something like that. They still search for those things. But number one — head and shoulders — the most searched-for term is ‘work from home’,” he said.

“So it’s clearly something that people value.”

Nicer offices

People who rent offices say there’s still strong demand, particularly for higher-quality stock in good areas of our capital cities.

There’s been what one calls a “flight to quality” as companies make the most of fewer people being in every day to use the same space in more luxurious ways, or get the same space in a better building.

Rent is only about 2-5 percent of costs for most companies with offices in the CBD, whereas salaries and wages make up about 40 percent.

More luxurious meeting rooms, better “end-of-trip” facilities for bike riders and walkers and nicer kitchens are just some of the elements rental agents say clients want. 

“I don’t think many organisations are expecting that we’ll go back to five days in the office per week. I think they’re happy to continue with a certain degree of hybrid working,” says Tom Broderick of CBRE.

“But corporates who are seeing maybe an average of one to two days a week in the office, they are really wanting to drive higher occupancy rates, because they see the benefits of collaboration, innovation. That kind of comes from people face-to-face in the office”.

The other element — mentioned by everyone from CEOs and executives to human resources leaders and academics — is about the mentorship and training of younger staff.

“That,” Mr Broderick notes, “is really hard to replicate from home.”

This article was published in ABC on 30th November 2023