The changing role of city offices as more employees seek to work from home

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Sydney and Melbourne have been the traditional prime destinations for senior jobs, with many large organisations choosing one or the other for their national or regional headquarters. However, the nation’s biggest cities will face unprecedented disruption as the ongoing impact of COVID-19 and advances in cloud-based technology continue to shift workers away from CBDs.

Urban planner and Griffith University lecturer Tony Matthews believes the immediate future will see many professionals who formerly commuted into the city doing a large proportion of their jobs from home. The implication of this “new scenario”, he says, is that the CBD space demands of government departments and companies will fall, in some cases dramatically.

“It makes no sense to be paying rent for floor space for desks that are only going to be used three days a week – it’s better to have a shared desk that is used all week,” he says. “A lot of office-based businesses are probably likely, over time, to reduce their space needs, which will lead to more vacant space in commercial and office buildings.”

The extent of the change will depend, to some degree, on whether offices are used by the private or public sector. Matthews believes government departments are less inclined to embrace wholeheartedly a flight from capital city CBDs to home.

He says one lesson from the pandemic is that governments need to show a “public duty” to cities by ensuring their employees operate, where possible, from the office. “Governments, particularly state governments, are quite determined that their majority workforce remain working in head office,” Matthews says. “(They) expect them to be at least available there a few days a week, which will make it functionally impossible for those workers to relocate.”

By contrast, it’s likely many private sector workers will never return to the CBD. According to Matthews, with no civic obligation to the city, corporates lumbered with excess office space will likely look to cut costs and downsize their CBD footprint.

“We do see some fairly compelling migration data, and also in terms of property price data, that indicates there is a big bounce in certain regional markets,” he says. “People are moving to certain regional areas permanently.”

Reinventing the city office

While fewer people in the office will present some challenges for companies and departments – and has flow-on effects for the overall liveability of Sydney and Melbourne – Stephen Minnett, founder of architecture agency Futurespace, sees an upside.

Minnett says in the case of “crowded” offices designed to house up to one person per 8m², it’s likely that some firms will take advantage of lower occupancy to reconfigure their workplaces.

“There will be fewer individual desks and client-facing meeting rooms but there will be more space dedicated to social and collaborative activities,” he says. “There will also be more rooms required to connect people in the office with those working from home via Teams and Zoom.”

With working from home perceived as a viable option, it’s also likely that firms and government departments will make offices more interesting places to occupy. Minnett says the key to making this work – whether to entice top talent or coax workers out of home – is creating a much more diverse physical space that offers greater choices.

He points to innovations such as malleable or “hackable” spaces that allow people to configure space the way they want, chillout retreats, wellness spaces and the incorporation of environmentally friendly materials for a more biophilic office.

“The most important function of an office used to be to support individual work,” he says. “Now many people realise that can be more effectively done from home, the most important function of an office will be to support social, team and collaborative activities. People also want the space to have a vibe or buzz – it should be a stimulating place to be where you’re glad you spent the time commuting to get there.”

The need for action is pressing, he says, given the looming war for talent. With a slowdown in immigration coinciding with a recovering economy, he predicts a “real talent shortage” means companies will have to meet the market with a flexible hybrid employment offer. He concedes this is still being figured out by leaders inside private organisations and government departments.

“We don’t yet know what will become ‘best practice’ in different industries and locations.”

CBDs to ‘collaborate and create’

Louise Watts, the co-founder of workforce transformation consultancy Transition Hub, envisages future CBDs where most workers come into the office but not all the time. She says decision-makers will need to find innovative ways to strike a balance between flexible remote working and in-person arrangements.

She points to the case of KPMG’s New York City operations. It includes a 5,000-person capacity office that is supplemented through the year by using Madison Square Garden. “They would hire Madison Square Garden for their all-hands once a year but assume every day of the week there would only be 5,000 people in their office location,” she says.

“We’re always going to see a need for bringing people together, and that’s got to happen somewhere.”

Watts also says Millennials and Gen Z workers must be catered for when it comes to CBD-based work. Younger workers crave flexibility but don’t want to be “stuck at home for the rest of their lives”.

“They want mentoring,” Watts says. “They’re the generation that’s coming into the workforce saying ‘I want my leader to be a coach, I want to have a career conversation, I want to sit down with someone and explore my career path’.”