Rise in CBD office space vacancy has industry leaders warning of changes to business operations

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OUTRAGE AS BAN ON EVICTIONS EXTENDED

THE STATE’S real estate agents have labelled the decision to extend a moratorium on evictions as “completely and absolutely disgusting”.

Building and Construction Minister Elise Archer announced the extension for residential evictions just a week before it was due to expire.

Evictions are now banned until January 31. The measure aimed to prevent tenants who had lost income during the pandemic from being evicted.

“This decision has not been made lightly, however, the safety and security of Tasmanians is of paramount importance to our government, Ms Archer said.

“Bearing in mind this impacts financially on landlords in particular, in addition to the extension of the emergency period, the Government will also be extending the availability of both the COVID-19 Rent Relief Fund and the COVID-19 Landlord Support Fund.”

Alex is a Brighton property owner who is owed $6k in rent. He is a support worker who for the past 3-4 months has been working an extra 20-30 hours a fortnight to cover the loss. Picture Chris Kidd

Real Estate Institute of Tasmania CEO Mark Berry told members the move was a betrayal.

“The REIT and you, our members, should feel extremely let down that you and your owners have not been properly considered in this decision by government.

“At this time I have absolutely no confidence the moratorium will end on the 31st of January 2021 either!

“I have been deceived.”

But Tenants Union spokesman Ben Bartle dubbed the extension a “huge sigh of relief” for tenants.

“The median Tasmanian renter was in rental stress pre-COVID-19 so [this moratorium] has meant renters have had more money in their back pockets,” he said.

Mr Bartle applauded the state government for offering some of their “generous” rent relief and landlord support funds.

A Brighton property owner and support worker known as “Alex” said although he was grateful to receive assistance, it wasn’t enough to cover his tenant’s “abuse” damaging his income.

Alex is a Brighton property owner who is owed $6k in rent. He is a support worker who for the past 3-4 months has been working an extra 20-30 hours a fortnight to cover the loss. Picture Chris Kidd

He was “gobsmacked” by the announcement and feared his tenants, whose benefits increased during coronavirus, would continue paying nothing.

“I’d be happy to help if they needed it but they haven’t been affected by COVID and they haven’t done anything to access a tenants scheme.”

Louise Elliot from the Tasmanian Residential Rental Property Owners Association was also disappointed.

“Conservatively Landlords are owed at least $300,000 in rent.

“The Government needs to immediately provide another round of funding through the misleadingly named Landlords Support Scheme to pay some of these arrears.”

Labor’s housing spokeswoman Alison Standen said the move was callously slow.

“The callous Liberals have moved deliberately slowly, to create pain and distress they could then act to alleviate in the interests of a PR win for the relief they should already have provided.”

DIRE PREDICTION AS CBD VACANCIES SPIKE

AN INCREASE in CBD office spaces sitting dormant and being advertised for lease has been linked with a shift in white collar employees working from home this year with predictions it could kickstart a significant change in the way businesses operate in the future.

Realcommercial.com.au shows there are 140 Hobart office spaces available for lease this month.

According to ABS data, during the month of October, 41 per cent of working Australians reported working from home one or more times a week.

Industry leaders are suggesting there is a link between the CBD vacancies and the shift in Tasmanians working from home.

Stakeholder budget reactions on parliament lawns, CEO Tasmanian Small Business Council Robert Mallett. Picture Chris Kidd

Tasmanian Small Business Council chief Robert Mallett who lives and works in the CBD said he’d noticed a recent spike in empty office spaces, saying it could represent the start of significant changes to future business operations.

“In March [welfare payment scheme] JobKeeper finishes, and it’s at that point that we’ll be back to whatever normal we’re going to be at for some time to come,” he said.

“It might be the final determinant of who works from home, the CBD or suburban offices.

“If rents in the CBD become too expensive, there’ll be plenty of suburban landlords encouraging people to work outside the city.”

Real Estate Institute of Tasmania president Mandy Welling.

Data about Tasmanian office space vacancies isn’t stored, Real Estate Institute of Tasmania president Mandy Welling said, but she said anecdotal evidence of office vacancies was glaring.

“It has been noted by the entire industry and it’s not just a Tasmanian thing either,” she said.

“It’s a real concern but I think COVID has shown us we have the ability to work from home thanks to technology.

“I don’t think it comes down to the fact that office spaces suddenly became too expensive. I think it’s a COVID shift in that businesses had two choices – to let staff go or to create home offices for them.”

The drop in office space demand hasn’t just been limited to the CBD.

Vacant office spaces Hobart CBD, 183 Macquarie Street. Picture Chris Kidd

Qantas’ well established call centre at Dowsing Point, while retaining similar employment numbers, no longer requires all its tenancy and as a result the company has advertised to lease part of the complex.

Claude Alcorso of Edwards Windsor who is managing the lease said: “the old model of 9-5 with everyone in the office at the one time is out”.

“Employers and employees are now negotiating more creative and flexible ways of working – space for social distancing, as well as part time/full-time home office balance.

“This is freeing up office accommodation in prime locations and leading to new availabilities that previously haven’t been an option for 15 years.”

Vacant office spaces Hobart CBD, Corner of Brisbane and Argyle Street. Picture Chris Kidd

While also predicting some organisations to reconfigure their office layouts to provide safe workplace distancing measures for staff, Harcourts managing director Warwick Hobart said he hadn’t noticed an increase in sublease space hitting the market following the pandemic.

He said longer term implications for the commercial property market may include reduced leasing incentives and the potential for rental increases in 2022/23.

“Implications could also include refurbishment of B Grade office buildings in response to increased demand and higher rentals,” he said.

Mr Hobart also predicted increased demand for suburban office space “particularly if parking is available with the office space”.

Vacant office spaces Hobart CBD, 149 Macquarie Street. Picture Chris Kidd

While restrictions begin lifting, the return to office work might not be in the same manner as seen pre-COVID, Deloitte Access Economics partner David Rumbens said.

“The COVID-19 emergency has given both employers and employees time to observe the costs and benefits of working remotely, while businesses have been forced to overcome previous barriers by investing in technologies and rapidly developing new work methods,” he said.

“Importantly however, businesses are unlikely to completely abandon the office.

“Both employers and employees recognise the advantages of in person collaboration and the wellbeing benefits of social interaction with colleagues more generally, especially after months of social distancing and isolation.

“Underpinning these shifts will be economic momentum. Employment growth in Australia’s metropolitan areas will continue to positively underpin future office demand.”