Will COVID-19 be the demise of CBD commercial?

Interesting My good Friend is doing medicine , She has had to do who lectures and many things online. Her opinion and many classmates that they couldn't wait for unis to go back to functioning normally and being able to be in class and working with other students.

How do the students in your area feel about working remotely?

 

OK I see how a recruitment firm who places people into employment can do this.

 

From what im hearing. The desk jobs of the past can be replaced from Desk at office to home.

Now question how much of the workforce is that?

I guess the question than begs. Do we need so many office workers.?

In future will requirement firms be needed at all? My wife spent 5 years in her early days in IT requirement firm.

She is of the opinion that SEEk and such will get much better tot he stage employers will find staff more efficiently with out the need of additional third parties. Also matters such as conveyancing will be automated.(This is in some way happening now with digitization of conveyncing process already)


I think the current situation will show many employers how many staff they need . Many jobs may not come back or automated or if working remotely will be efficient may also get employers comfortable with outsourcing to other countries.

If they realize there is little need for employers to be at the office . The next logical step is do we even need them to be based in Australia?

Looking at the table below we can see which industries may have the changes come to them first.

 

I dont really buy this "wfh is going to be permanent" thing. I think people are forgetful and once this settled down a couple years, city centre will go back to the buzzy glory. So much money has been invested into inner city area by a country, institution, investors, individuals, they wont just give up like that.

 

The WFH movement may get some traction but with 130,000 net migration to Melb and 110,000 to Syd, over another 7-8 years that’s another 1 million people per city. I doubt the movement will outpace the creation of office jobs especially ones in the CBD.

In the mean time Syd and Melb are surrounded by significant state infrastructure like universities. Look at where all the public transport investment is being made. It’s just going to become the highest density living hotspots in the country and you’ll have huge concentration of people in a single spot. Plus tourists, overseas students etc.

Retail yea struggles vs online, but does much better than any shopping centre out there for reasons above. It’s now an experience as much as anything to come to the city, bars, variety of restaurants, entertainment venues. You come out to say Melb CBD (Syd been fxxked by the government) on a Friday night and you think you’re in downtown Shinjuku or Tsim Sha Tsui sometimes. The best investment decisions one can make in CBD commercial - especially developable sites - is to do nothing once you get in. Over the same period I’ve seen these things triple, average resi has gone up 20-40%.

Take that Abeckett St property I posted. It was probably $3m in 2012/13. I was looking around there at the time. Now it sold for $8m. You buy an average Kew house for $3m in 2012/13 it’s probably what? $4.5m now? What people don’t get is CBD is also about height. Value is in the eye of the beholder - if he thinks he can combined it with next door and get a 50 storey permit, it can be worth $15m to him.

 

Two discussion points here.

Automation
I definitely think CV19 has supercharged this even more. Poor processes and time wasting activities (another massive con for office environments) are being exposed more than ever. It’s funny how much people can hide behind a good conversation and looking like there busy in an office.
My job is basically building automated systems and I have been astounded by some of the things making their way to my desk during this time. As Just one example meetings to sign documents. I mean this is not earth shattering stuff but in today’s day and age is pointless.
1 hour tasks reduced to 1 minute.

Outsourcing
I understand the theory but just because your not in the same space as someone doesn’t mean the skills required for the task diminish. I would argue if anything the skill of communication (which overseas outsourcing will simply never compete with) become even more vital. But I do believe and won’t argue that companies will be more inclined to maybe try it.
As I have said previously as well though the act of WFH can also be used by employers as a way to reduce salary and costs.
As an employee what does WFH provide me? There is hard savings for things like travel, insurances.etc. But there is then the saving of time...what is someones time worth and then there is all the other benefits that come with that..physical and mental health.etc
So if you put 2 identical jobs side by side one CBD based and 1 with WFH then what as an employer could you offer for salary between them and still attract the same candidate?
It definitely won’t compete with the cost of outsourcing to the Philippines but you could save yourself a hell of a lot and get better locally skilled staff.

 

I am in web application engineering space. There's no doubt that face to face collaboration is needed and prefered, but there's also lots of benefit with the ability to work remote as much time is saved from traveling and cutting out all those unwanted interruptions during the day. I think a more hybrid type of work arrangement will be more accepted as a norm, hotdesking with larger portion of the work force working from home will become more common. It was already happening prior to pandemic, it has accelerated in a big way during this crisis.

 

I'm in the commercial development space myself and had a good chat yesterday to GPT

Not a lot of deals to base this on but so far for CBD & CBD Fringe, rents have stabilised or come off only 5-10%. Incentives have increased from 15-25% to 30% and lease lengths for big leases have come off 10-15 years to 5-7 years. Charter Hall have just exchanged on an industrial site in Sydney at a 4.75% yield so cap rates remain tight

We submitted an offer for a fringe Sydney CBD office site pre-covid and will submit an increased price over the next couple of days

Even given the above, I think CBD will struggle for the next few years with the Fringe (Pyrmont, Surrey Hills etc), North Sydney and Chatswood benefiting. GPT in fact are looking at building commercial office towers around the new Metros

Good sites that allow 1,500+ sqm floor plates and allow plenty of natural light will still always be in demand

 

I’m in a business of + 1000 people, 6 floors of CBD office space. We are going to 3 floors, half the business WFH on rotation.

 

Will this change the balance, half as many people in half the space? It will only benefit the business to be running leaner but won't achieve the spatial requirements for staff.

 

Millions per annum trimmed of rent costs...same number of staff.

 

Time to buy some shares in the company and cream the profits.

 

Bang On!
The absolute way of the future.
Loving seeing all these micro managers getting a real dose of reality as to just how productive people are from home.

So many people I talk to are getting more done than ever before. Crazy what’s achievable when we don’t spend 2 hours a day on useless commutes, office garbage talks, pointless meetings, pointless vendor/client coffees. Just pure FOCUSED work with the occasional load of washing thrown on.

 

Still having meetings that are scheduled and go on and on unnecessarily... some are 30 minutes, go for 90. Some are 60 and go for 90....

 

Yes, but not if it's video on and you need to concentrate/provide data during it etc.

 

If they can work from home then they can work from India, Philippines ect... Wow the unemployment. Doom and Gloom becoming the new normal, so deflating.

 

Who still needs the office? U.S. companies start cutting space

NEW YORK (Reuters) - Corporate America is downsizing its real estate footprint as companies allow more employees to work from home, a growing threat to the bottom line of owners of traditional office buildings and a sign that companies are looking for ways to cut costs as a result of the coronavirus pandemic.