How the role and function of CBD buildings might change
Working from home will be the biggest change to cities post-Covid.
The coming of the coronavirus is the biggest social factor to have affected the Australian property market since the women’s movement changed both the workplace and the home, primarily from the 1970s onwards.
More women working injected discretionary spending power into the family home, which upscaled and changed as a consequence. And the coronavirus introduced us to the novel concept of working from home. Both movements have helped transform the Australian way of life.
Some say that in the post-Covid world “things will get back to normal”. No they won’t. Australians are primarily driven by lifestyle.
WFH enables not all but many workers to live a better quality of life.
The Australians may not have invented suburbia, but we most certainly elevated it into an art form. At the Sydney 2000 Olympics we included a parade of suburban motor-mowers to project our (suburban) way of life to the world.
Together with data scientist at The Demographics Group, Hari Hara Priya Kannan, I have classified 480 occupations comprising the Australian workforce into jobs that could, and that could not, be completed at home.
Based on ABS labour force survey data published quarterly it is estimated 27 per cent of the workforce (about three million workers) could work from home post pandemic.
At the 2016 Census about 500,000 workers worked from home, and which equated to 5 per cent of the workforce. By 2021 this pre-pandemic WFH workforce might have risen to, say, 600,000. This means that in 2022 up to a net extra 2.4 million workers could theoretically work from home. Let’s boldly chop that in half (and more) and assume a net increase in the WFH workforce of a million workers in the early- to mid-2020s.
If my assumptions are correct, the 2021 Census results to be published in November 2022 will show work from home comprising 12 per cent of the workforce or thereabouts.
The point is this post-pandemic proportion is likely to be closer to 10 per cent than it is to 20 per cent.
But this exercise is useful in that it sets parameters around the impact of WFH. Senior management teams and boards of property investment and development businesses need both a metric-based assessment and a narrative around how the demand for CBD office space will play out.
We have filtered the workforce across two sets of geographies to assess which office precincts are most exposed to the pandemic-inspired social shift of working from home.
We have identified the 20 biggest workplace destinations in Australia at the 2016 Census based on worker numbers. These destinations are based on suburbs (known as SA2s by the ABS).
The biggest workplace destinations at this time were the Sydney CBD (including Haymarket and The Rocks) SA2 with 321,000 workers, followed by the Melbourne (central grid) SA2 with 221,000 workers.
By applying the WFH occupational filter to workers working in the 20 biggest workplace destinations, we can see the extent to which each could be impacted by the rising WFH movement.
While across Australia 27 per cent of workers work in jobs that have been assessed (by me) as capable of being completed from home, in North Sydney-Lavender Bay this proportion tops 67 per cent. In Canberra’s Civic and in Melbourne’s Docklands it is 62 per cent. In the Sydney CBD it is 61 per cent.
In Melbourne’s manufacturing heartland of Dandenong, which was the workplace destination for 66,000 workers in 2016, this proportion was just 23 per cent. For Geelong (CBD) this proportion was 27 per cent.
If WFH does emerge as a powerful social force in the workplace it will be constrained by occupation (not everyone can do their job from home), and by geography. Jobs based in the city centre and in the inner-city are most likely to be redirected into a hybrid arrangement.
But while this ranking of the 20 biggest workplace destinations in Australia (at the 2016 Census) by the proportion of jobs that could be done at home is interesting, it doesn’t account for the fact jobs tend to cluster. And so we have completed a second analysis based on the workforce working within a 5km radius of the GPO in our five biggest cities.
Again these figures are only available at the 2016 Census level, but the exercise does showcase relative exposure of office space to the WFH movement.
The number of jobs within central Sydney (as defined) was 617,000 while that for the same part of central Melbourne was 590,000. Job numbers in the smaller capitals trail off: 316,000 for Brisbane, 207,000 for Perth, 198,000 for Adelaide and 111,000 for Canberra.
Then, when the WFH filter is applied specifically to jobs being done in the centre of each city the following proportions are produced: 53 per cent for Canberra, 52 per cent for Sydney, 50 per cent for Melbourne trailing to 39 per cent for Adelaide.
On these figures, about half the jobs in central Canberra, central Sydney, and central Melbourne, theoretically, could be done from home. The smaller state capital cities are less exposed to what is effectively a threat to the occupancy of commercial office space posed by the WFH movement.
When the same filtering exercise is completed across suburbia it is evident that workers who work in jobs that could be done at home often cluster in the inner city. Therefore, it may be that inner-city knowledge workers are not as predisposed to working from home as are other workers because “home” is located within walking, cycling, or a tram ride from the office.
What flows from this analysis is about three million workers who could work from home post pandemic will make decisions that suit their circumstances and aspirations.
It’s hard to see post-Covid workers commuting long distances to CBD workplaces five days a week for a 30-year career. They might do it for a while until they can negotiate more suitable arrangements.
Equally it’s hard to see knowledge-worker residents of CBD-fringe apartment buildings working from home when they live within sight of their workplace.
The issue for CBD-based employers is workers will now weigh up the cost-benefit of every commute.
“What’s the point of spending 50 minutes commuting into and out of the city centre if I spend all day in an office, or in a designated workspace cubicle, writing a report or completing an analysis?”
The CBD and the CBD-office building must morph into a fuller workplace experience: a place to learn, to collaborate, to celebrate, to be mentored. Tuesday might be governance and ethics training. Wednesday might be team meetings. Thursday might be client schmoozing. Once a month might be technology training.
The floorplate must change as a consequence: more need flexible meeting, training, presentation activities and less requirement for isolated work involving concentration and/or creativity. Those tasks will be saved for “home days”.
And protocols must evolve to ensure that work-related activities are supported by teams who agree time-in-the-office days.
The picture emerging is of a rising social force that is likely to gain more traction in Canberra, Melbourne and Sydney than in other cities. And of a workplace that is more active, more articulated, more curated in terms of the use of time and floorspace. Gone is the mass of office cubicles; in comes space that is active, movable, educational and informative.
All of this coming and going will need to be co-ordinated, managed and fed to staff by teams. It’s almost as if what is required is a job not so much of an office manager but of an office and/or activity co-ordinator. A bit like the conductor of an orchestra making sure that every team, every division, every level of seniority plays their part in delivering workplace value.
Welcome to the symphony of office work that is likely to emerge in the post Covid world. The office building in this sense ceases to be solely and office building with food court attached. It’s more of a theatre complex with people coming and going for specific purposes.
Bernard Salt is executive director of The Demographics Group; research by Hari Hara Priya Kannan
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