Digital Business insights: No future for commercial property

Week after week, office vacancy rates are published for the major cities – Melbourne 10% empty, Brisbane 14% empty, Sydney 10%, Perth 8% and so on.

The general view is that things are unlikely to improve soon.

It seems that the weak Australian dollar, the GFC, rising bond rates and the rising vacancy rates themselves are all leading to flat and falling rental income and resulting in a “challenging outlook” in the short to medium term.

Each week I now search in vain for some reference to the impact on commercial property of the digital revolution.

There is no mention.

In article after article, and interview after interview with industry experts not one of them raises the issue at all. Maybe they are frightened of lifting it onto the radar.

I would have thought it was obvious.

The digital revolution is having an enormous impact on commercial property and its prospects for recovery.

A “challenging outlook” is much too kind a description for a situation that is far worse than that.

In all the articles I have read over the past month or so I have never seen Teleworking mentioned – not once.

The Federal Government has been promoting Teleworking over the last year and there will be another Telework Week this November.

But that isn’t the point.

Businesses and organisations are teleworking already. Forget the Telework Week. It is happening right now.

In all of our recent surveys roughly half of organisations have one or more members of staff that work from home for some part of the week. Some for all of the week.

That's 58% of professional services, 67% of public administration, 72% of rental, hiring and real estate, 51% of wholesale, 50% of Information media and so on.

Which means less demand for office space.

And as more and more organisations become comfortable with teleworking, what possible evidence is there that vacancy rates are going to drop some time in the future?

They won’t. Vacancy rates will soar and the situation will get much worse. And businesses will become increasingly selective as a result.

Fast broadband. WiFi. Comfortable meeting spaces, variable sizes and lots of them.

Every organisation we speak with is reducing their demand for office space and in some cases getting rid of it completely.

And what businesses and other organisations will want from a commercial office in the future is very different to today.

It’s the same thing with retail space.

I’ll keep looking at Primespace every week, and hope to see an article about teleworking soon.