Returning to the Office - The New Trends Set to Reshape Cities

As big corporate groups such as retail rivals Woolworths and Coles issue stricter requirements for their staff to be present in the office, the number of days on average mandated to attend workplaces is increasing. This shift is driven by a desire to enhance collaboration, reinforce corporate culture, and improve productivity.

The PAR analysis revealed that an additional 41,000 workers are expected to return to city workplaces each week, with approximately half of them based in Melbourne. Conducted by the PAR Group—a partnership between Data App’s Rob Ellis and Y Research’s Damian Stone—the study examined hybrid work patterns across 620 Australian companies, incorporating industry data on daily workforce attendance.

This return-to-office momentum is being seen as a significant boost for three markets – commercial and residential property and retail. Increased office occupancy is expected to stabilize demand, reduce vacancy rates, and potentially drive rental growth in prime city locations. The trend could also lead to increased investment in modernizing office spaces to make them more attractive to workers.

In the residential market, this shift could influence housing demand, particularly in major cities. Employees who had moved to regional areas, outside of major satellite city’s, may now have to reconsider their living arrangements to be closer to their workplaces.  This could drive increased demand for inner-city apartments and rental properties, pushing up prices and making urban housing more competitive.

While the return-to-office trend benefits the property sector, it also raises questions about work-life balance, employee flexibility, and the long-term sustainability of rigid mandates. Companies will need to balance in-person collaboration with flexibility to retain talent. For landlords and investors, the shift presents an opportunity to reposition office spaces, while residential markets may see a rebalancing of demand between city and regional/suburban living.

The evolving work dynamic is reshaping major city property markets, with both opportunities and challenges ahead for businesses, employees, and investors. Whilst vacancy rates in certain major city’s are still high, yields have improved dramatically and opportunity for future returns is widely evident.

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Resources:

https://www.afr.com/property/commercial/office-mandates-stretch-towards-four-days-mondays-fridays-on-radar-20250128-p5l7um

https://www.afr.com/property/commercial/back-to-the-office-momentum-a-win-for-sector-20250204-p5l9kz