• While offices in most capitals around Australia are above 60% capacity, Sydney and Melbourne are lagging well behind.
• Melbourne workplaces are at 31% occupancy and those in Sydney are at 45%, according to the latest Property Council of Australia survey.
• Despite boasting of the benefits of being in the same room, major employers are keeping work from home arrangements in place for now.
• Visit Business Insider Australia’s homepage for more stories.

Despite encouragement to return to the office, workers appear reluctant to leave their work from home arrangements in Australia’s two largest cities.

Offices across Melbourne are more than two-thirds empty, while those in Sydney are at less than half capacity, according to the Property Council of Australia’s latest occupancy survey.

It underscores just how slow the transition back to the workplace is proving after nearly a year of work from home (WFH) arrangements.

In Melbourne, which only began easing its restrictions three months ago, the migration of employees back to the CBD has been a laboured affair. Reaching a low of 7% at the peak of October’s lockdown, the occupancy rate climbing to 13% in December before jumping to 31% in 2021.

On January 18, the Victorian government raised the office threshold from 25% to 50% in a bid to get the city back to business.

“It’s pleasing to see that a consistent run of positive health results and the State Government’s loosening of restrictions that have capped the number of workers permitted to return to a workplace, has resulted in more and more Victorians returning to the office,” Danni Hunter, PCA Victorian executive director, said.

However, while progress is being made, Melbourne continues to be home to the most empty offices in the country, with most capitals twice as full.

Sydney is the obvious exception. At 45% capacity, the North Shore outbreak before Christmas has put a handbrake on the transition from the dining room table to the office desk.

Employers are slow to enforce a return to office

While it has become an objective of state governments to help revive their respective business districts, many employers are treading carefully in bringing staff back full-time.

The New South Wales government for example has softened its stance from urging businesses to return, to simply deciding to set an example by bringing its own workforce back.

Major employers like the Commonwealth Bank, NAB, Westpac, and large consultancy firms are broadly retaining WFH arrangements for now, with only essential staff really required in the office.

Atlassian, meanwhile, has informed employees they can work from home indefinitely, telling Business Insider Australia there are no plans to “run back into the way that work was pre-February”.

Mixed impact of decentralisation

Given the sudden progressive approach of Australian workplaces and the attractiveness of flexible work, those left holding the bag are looking a little nervous.

The Property Council unsurprisingly remains of the view the office isn’t dead yet with corporate spaces still retaining “the benefits of collaboration, productivity and positive team culture”, according to Hunter.

“For every one knowledge worker, there are five jobs which are supported by that worker’s attendance at the office,” she added.

Cafe owners paying CBD rent would likely agree, as would Australia’s largest office manager Dexus. Reporting results on Tuesday, the $32 billion company revealed profits had slumped 55%, as the value of its portfolio loses growth momentum. Income from its office towers fell almost 3% on the back of rent relief and the downsizing of its asset portfolio.

While chief executive Darren Steinberg noted office landlords would be giving out further discounts for a while longer, he too believes workers will eventually return in force.

“[I’m] confident that the office will remain a core part of our customers’ needs and [we] have been preparing for increased flexibility for many years,” he said.

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