Major players downsizing offices in Sydney’s prime CBD sites

Businesses are cutting office space in the CBD as staff work from home, leaving high-profile sites such as Barangaroo searching for new tenants.

Major players in Sydney’s business landscape are cutting their office space in the CBD as more staff work from home, leaving high-profile sites in prime areas such as Barangaroo searching for new tenants.

Heavyweight firms Westpac and HSBC confirmed to The Daily Telegraph they were in the process of reducing their staff numbers at Lendlease’s $4.6 billion premium offices at International Towers on the Barangaroo foreshore.

Unleased office space in Sydney’s CBD crept up to 9.2 per cent in July, according to the latest Property Council report, up from 8.5 per cent six months ago, and 3.9 per cent in early 2020 before the pandemic hit.

The changing need for office space was highlighted in another report released by the Committee for Sydney this week, in which just 20 per cent of business leaders said they would encourage their staff to come back to the office full-time.

The offices of KPMG, Westpac and HSBC, at International Towers at Barangaroo. Picture: Justin Lloyd

HSBC has released one of the four floors it has at Barangaroo.

“HSBC is reducing its office space in Sydney — across Barangaroo and Parramatta — by 30 per cent before the end of 2022, in line with our strategy to reduce our footprint by 40 per cent globally and a shift to hybrid working,” Australian chief operating officer Brenton Hush said.

Fellow International Towers tenant Westpac was reported last year to be considering subleasing multiple floors of the site.

A Westpac spokeswoman did not confirm what action had since been taken at the site, but said the bank was “assessing its corporate CBD sites across Australia” as it embraces a hybrid model of working in the office and remotely.

Lendlease’s managing director of investment management in Australia Scott Mosely said he was confident workers would flock back to its development when lockdown ends.

“While there’s no doubt the pandemic has accelerated changes in our working styles, our customers and people are telling us they miss the office, the connection to others and street life,” he said.

Surplus office space in the CBD had not yet reduced rents, however, with NSW state director of office leasing at Savills Australia Tom Mott saying prices were “broadly holding” as businesses “can see the end to this via the Covid-19 vaccine roll out”.

He said agents were currently experiencing “higher than expected levels of demand” as tenants nearing the end of their leases explore their options.

Changes to staff working patterns are seeing more offices available to rent in the CBD. Picture: NCA NewsWire / Gaye Gerard

The Property Council’s NSW executive director Luke Achterstraat said Sydney’s sub-10 per cent vacancy rate “is a strong position for any global city even outside of a pandemic environment”.

But action needed to be taken to help the city bounce back and avoid turning into a ghost town like central Melbourne, he said.

“The lessons from Melbourne, who have recorded a strong negative demand in the last six months, show the importance of focusing on ensuring Sydney’s CBD, the economic heart of the nation, is supported to bounce back after the current lockdown,” he said.

NSW Government ministers Rob Stokes and Dominic Perrottet both backed the CBD to get back to its bustling self, with more than $40 million set aside for post-lockdown CBD revitalisation.

“There’s no doubt that the Sydney CBD looks different now when compared to pre-pandemic,” Planning Minister Mr Stokes said.

“The fact there are new commercial projects in the CBD is a vote of confidence. Working from home simply cannot replicate the dynamic activity that is offered when working in a global city such as Sydney.

“What might be an outcome of the pandemic is new demand for pied-a-terre living, which allows people to spend a few days in the city, and the rest of the week in their homes in the regions or on the outskirts of Sydney.

“We’ve made the planning system flexible enough to support the city’s ongoing evolution.”

Treasurer Perrottet said while working-from-home has had an impact on CBD office occupancy “we saw last year that when restrictions ease, many workers who had been kept away from city offices do in fact return”.

“When current restrictions ease and the state and country get to a place where lockdowns are a thing of the past, I’m confident we’ll see city workers return and office space fill up.”