Over the year, commercial real estate vacancy rates have surged across Australia (and the world), with the national CBD office market vacancy rate increasing from 8.4 per cent to 10.2 per cent in Q2 2020. As of August, data from tenantcs.com indicates that major cities like Sydney and Melbourne have felt the full effect. Vacancy rates jumped from 5.8 per cent to 7.5 per cent in Sydney and rates doubled from 3.4 per cent to 7.7 per cent in Melbourne. Other cities like Brisbane, Perth and Adelaide have seen less dramatic spikes. Canberra has been spared, with vacancy tightening thanks to the public service.
Going forward, tenantcs.com indicates that the volume of office stock set to come online in Sydney (150,000 sqm) and Melbourne (400,000 sqm) this year may see vacancy rates blow out to 9 per cent by the end of the year and 11 per cent by 2023.
Throughout the pandemic, working from home has become the new normal but challenges have emerged. Some of the biggest challenges include staying organised, managing time, switching off, inability to effectively collaborate and the loss of social interactions. Perhaps the most obvious positive of working from home is not having to commute to work every day, saving time and money. However, even this has its pitfalls. The commute enables workers to psychologically transition between work and non-work life.
The luxury of residential amenity can mitigate some of the setbacks of working from home. Having convenient access to the likes of your own gym, co-working space, click and collect and many more amenities in your own building makes working from home that little bit easier. Nevertheless, it still doesn’t replicate the full effect of working in an office.
The question is what value amenity offers to an investor. The answer might seem obvious: amenities that improve the experience of working from home will be of greater utility to potential tenants in a post-COVID world.
There are three major benefits of having residential amenity in your apartment building as an investor:
- Rentability: ability to find and keep a desirable tenant
- Lifestyle: the new post-COVID-19 lifestyle gives tenants the ability to work flexibility
- Exit strategy: future-proofing your property