What Is Instore For The Commercial Office Market – Post Covid With Jamie Davey

It was over 18 months ago that the first covid case was reported in Australia, yet the impact the pandemic has had on the Australian office market continues to be a prevalent topic of discussion for most landlords. Office occupancy rates are still below pre-covid levels and landlords will need to start diversifying their tenant base to ensure their properties are not vacant for extended periods of time. With many businesses adopting the work-from-home model on either a part time or full-time basis, it is leaving a gap in the office market as these organisations have had to either postpone plans for relocation or sublet tenancies to continue operations.

What does this mean for the Queensland office market moving forward?

Pre-covid times saw the office market dominated by five major industries: Professional Services, Information Technology, Finance and Insurance Services, Mining and the Public Sector, however with the pandemic affecting the way these major businesses operate there is a need for landlords to look beyond these tenants and incorporate non-traditional occupiers such as educational and healthcare services.

Educational and Healthcare services are generally long-term occupiers, which for most landlords will be a benefit as they hedged the vacancy risk due to their limited need of relocation and will be seen as a more attractive option as the traditional occupiers continue to be challenged by ongoing economic uncertainty.

Although there are certain prerequisites to be met before a property can be occupied by a training or educational facility, the weaker market conditions and competitive leasing environment prove that it would be best to invest in some capital expenditure to ensure a long-term tenant can be secured.

According to a study conducted by Jobs Queensland in early 2020, it was predicted that over the next few years 60% of all new jobs created will be across just four industries; Healthcare, Professional Services, Education and Accommodation and Food Services.

While the issues facing the office market are expected to continue in over the short term, the outlook of employment growth in healthcare and educational services continues to be positive. This growth will provide landlords the opportunity to diversify their tenancy base and also allow healthcare and educational tenants a chance to improve their current operating environments.