Empty offices – no movement in rents!

John Kehoe wrote a piece in the AFR on April 24^th about how the [1]“public service ‘ghost’ offices should rile taxpayers”. Seems like a fair point, if employees are now predominantly working from home (WFH), with 57% of public servants in 2023 doing just that, why are governments and others not reducing or renegotiating floor space and rentals? Is it just taking time to adjust, with many lease terms three, five or more years, are we just seeing a slow rebalance?

Certainly, it seems sub-optimal to be supporting employees desire to work from home and then simultaneously renting expensive downtown office spaces with nobody at their desks! Certainly, there is an argument that staff need their CBD desk space on the days they work in the office, rarely a Monday or a Friday – I’m not bitter! Surely it can’t be long before we see hot desking on some kind of rota system to reduce footprints.

We have seen little evidence of rents coming down, presumably the supply and demand balance currently favours landlords. However, we can’t help but think that a rental rebalance is inevitable. Watch this space.

Please feel free to share your recent experiences with rental negotiations.

Good luck and stay safe.

References:

[1] AFR April 24 Page 29 Public service “ghost” offices should rile taxpayers

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