Mandates and Office Demand
Recently NSW Premier Chris Minns issued the C2024-03 NSW Government Sector workplace presence, stating among other things, “Government sector agencies are expected to have flexible work policies that meet reasonable requests of employees, but the default arrangement is to work principally in an approved workplace, office or related work site. Individual agencies will be responsible for designing and monitoring their policies.”
The intention is to try to bring more people back to the various precincts in which the government offices are housed, whilst simultaneously respecting flexibility and work arrangements. It is to bring back some vibe that has been lost over the last couple of years.
From what we have heard, foot traffic in Sydney CBD is about two thirds of what it was before covid. Of course, each retailer is different and has a different view. However, for retailers, any increase in foot traffic would be a great and appreciated thing. One wonders whether their rent is now two thirds of what it used to be.
From an office perspective, it may increase office demand. However, the state government leases a lot of space in various precincts. If people do come to the office more often, it will increase the occupancy of those leased offices that are not fully occupied. We doubt it will make the state government lease more space than it already leases.
Looking ahead, it may lead to the government reviewing how it uses office space in various precincts and potentially lead to leasing less space using different utilisation rates. It is happening in the private sector, especially amongst the larger users. Of course, that would take a while to flow through the system for all sorts of reasons.
It will be interesting to see how this pans out over the next 5-10 years.
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