Following Australia’s 18-month fight against the COVID 19 pandemic, and with people drifting back to work in varying degrees, changes to commuting patterns have emerged which could have long term consequences for Australia’s CBDs.
A review of office occupancy and commuting (car traffic numbers, public transport use, walking, cycling and taxi) data highlights, at its likely peak, that there were approximately 228,000 thousand fewer office workers making the daily commute into Australia’s six largest CBD office markets. This equates to around 20% of the office population not going into the CBD each day.
Moreover, due to both the amount of time freed up from not commuting and the expected increased road congestion, should pre-pandemic levels of office working return, a significant proportion of workers are unlikely to return to the office. This is according to a new study by the PAR Group, an independent property research collective.
The PAR Group’s analysis, undertaken by Damian Stone of Y Research and Rob Ellis of the Data App, examined changes to commuting data from pre-pandemic levels to identify the potential number of office workers working from home on any given day across Australia’s six largest capital city office markets.
- In response to the COVID 19 pandemic, lockdowns and public health measures, CBD office workers deserted public transport across the country. Across all major CBDs, public transport usage decreased by 34.7%, on average, compared to pre-pandemic numbers.
- While car usage increased in both Brisbane and Perth, across Australia as a whole, it fell 15.3% on average.
- On a national basis, all other commuting types (walking, cycling and taxi) also fell from pre-pandemic levels, as fewer people made the trip into the office.
- Based on office occupancy in the second half of 2021, these changes to commuting trends suggest, at its likely peak, there were approximately 228,804 fewer office workers making the daily commute to Australia’s six largest CBD office markets. Nationally, this represented 19% of expected office workers.
- While a proportion of these results can be explained by lockdowns, the 19% is highly reflective of the increased adoption of working from home practices brought on by the pandemic. The 19% suggests, on average, CBD office workers across the country are working from home around 1 day a week.
- These results suggest the lost CBD retail spending from office workers could be significant. See http://par.group/working-from-home-is-not-a-free-lunch/ for a more detailed analysis of CBD retail spending.
The chart below outlines the changes to commuting patterns by travel type across the six major Australian capital cities.
18 months since the COVID 19 pandemic first led to the shutdown of Australian CBDs, data now highlights the behavioural changes Australian office workers made to their daily commuting patterns.
Across the country, approximately 19% fewer than expected office workers shunned the daily commute to their CBD office building in favour of working from home. Whist this probably represents the peak in workers not going to the CBD office, working from home, even one day a week, has significant longer-term consequences from CBD property assets, as well as society at large.
For CBD office markets, working from home is likely to see companies eventually reduce their office space requirements. CBD based retailers, which rely heavily on the daily office workforce, could potentially experience a significant drop in retail spending, all of which could result in higher office and retail vacancy rates.
On a broader level, the adoption of one day a week working from home is likely to lead to increased congestion, as more commuters switch from public transport to car use. Consequently, CBD car parks are likely to be beneficiaries from increased demand.
With Monday and, to a lesser extent, Friday being the days favoured by employees working from home, increased congestion will most likely occur mid-week. Indeed, should working in the CBD return to pre-pandemic levels and with commuters maintaining their preference for private rather than public transport, policies will be required to manage congestion, congestion which is likely to have a negative impact on Australia’s climate change agenda.
Heading into the pandemic The Household, Income and Labour Dynamics in Australia (HILDA) research estimated the typical CBD worker in Australia spent around 66 minutes per day commuting.
The adoption of working from home one day a week, as evident in the current marketplace, would see the typical commuter save 55 hours per year simply from less time spent commuting, which equates to over one extra week a year of time back. That is, 55 hours to be a more productive worker, 55 hours to achieve a better work/life balance, 55 hours to be a more engaged family member or friend or 55 hours for fitness, volunteering, hobbies etc.
Evidence, so far, suggests that a significant proportion of workers are happy to make this trade-off. As a result, office markets are unlikely to return to the pre-COVID trajectory, while CBD retail spending patterns, compounded by the uptake of on-line shopping, are also likely to change.
Across the globe, “the great resignation” is underway. Employees, denied working flexibility from their employer, are voting with their feet. With the increase in remote working, employees are moving to more affordable or lifestyle residential areas. A further implication of the disconnect between where people work and live, is that Australian workers will increasingly be competing in a global market for labour.
The dialogue regarding Australia’s CBDs, as 2022 approaches, needs to move beyond getting office workers back. The evidence, so far at least, would suggest cities need to adjust to fewer people in the CBDs than prior to the pandemic. Consequently, all stakeholders will need to assess the role of the office post COVID 19, support measures for CBD retailers, facilitate a return to public transport, and offer incentives to encourage active commuting (walking and cycling) and the conversion of older secondary office properties for alternative uses.
For further information, please contact:
Rob Ellis, Director of the Data App. Mob: 0417 195 352 or email: firstname.lastname@example.org
Damian Stone, Principal and Chief Problem Solver of Y Research. M: 0433 525 414 or email: email@example.com
About PAR Group
Real Investment Analytics (RIA), The Data App (TDA) and Y Research are partners in PAR Group, an independent research collective offering a comprehensive range of property research and analytical services. The team is experienced in economics, property research, transactional and corporate strategy; all with extensive industry involvement in both the property and finance sectors. Visit: http://par.group/ for more information.