Article | Evolving Workforces

Why more employees are returning to the office in 2024

CBRE’s latest research is forecasting a strong return to office in Australia and our experts analyse why.

February 19, 2024

A communal space with plants and contemporary furniture in an open plan office near a sunlit window.

What began as a global push to keep businesses open during the height of a pandemic is now one of the most debated topics in the modern employment landscape: hybrid work. 

While the hybrid work model sits high on the priority list of employee workplace benefits, it’s a more diplomatic setting with options rather than strict return to office mandates.  

What have leading researchers discovered regarding the latest office trends right now?  

The return to office in Australia will continue gathering pace after reaching 71 percent of 2019 levels in 2023, well above the 54 percent recorded in the prior period, according to CBRE’s 2024 Pacific Market Outlook report.

What’s bringing people back into the office 

The concept of a quality work environment continues to evolve alongside the return to office trend.  

CBRE’s findings indicate a clear trend of tenants looking to upgrade their premises. Almost three quarters of the office re-location decisions in major city CBDs have involved premises which commanded the same or higher market rents. For these re-locations, the median net face rent is an additional 10 percent ($/sqm), when compared to what may have been payable if the occupier remained in the same premises.  

This trend is attributed to drivers such as office location, commute time and access to public transport. 

What's more interesting though is the renewed appreciation for workplace design and office technology. Environmental features like natural light and better air quality now rank highly, alongside dedicated spaces for individual online meetings and focused work.  

Attracting Gen Z and Millennials into the office needs even more creativity from building occupiers, with considerations for parking, food and beverage options, and apps which inform when colleagues will be in the office. 

“Great experiences, social interaction and human connection are going to draw more workers into offices,” says Jenny Liu, Director of Workplace Consulting at CBRE

“Workplace experience is key to enticing people back to the office and these strategies fall under the key categories of people, place and technology. A workplace experience isn’t just environment, cool furniture and tech anymore. It’s the culture, ways of working, leadership, and how vibrancy is created. This is crucial because people are your most valuable asset, not your real estate footprint and office space.”  

There’s also the importance of leaders’ responsibilities to act as “magnets” for employees who want to learn from them and experience how they deal with clients. 

“They want to grow their profiles and meet other people in the business. How do you curate those moments where people stay? You can’t. You need leaders there to create the opportunities and connections.”  

CBRE Research Manager Thomas Biglands says that face-to-face interaction and collaboration are key to driving more employees back into the office, experiences that aren’t possible via remote work. 

“It’s important that you achieve a critical mass of visitation so that employees come in and feel as though the office is vibrant and full. It’s also important that enough coworkers and managers are in the office so that they see value from coming in. It defeats the purpose if workers show up to the office and end up being on Zoom calls all day.” 

The significance of focusing on workplace vibrancy also doesn’t escape Biglands, who says that ground levels and areas surrounding the building need to be amenity-rich and busy in order to create excitement around return to office.  

“Landlords, local businesses, and even government bodies play an important role in enticing employees back. Building activations and community events are key to enhancing the value proposition of any office tenancy.” 

Why premium offices are in demand  

The pursuit of more people in offices has allowed premium office spaces to thrive in recent times. 

Based on data tracked by CBRE, over 90 percent of office occupiers looking for space in 2023 indicated they wanted prime space (an average of Premium and A-Grade assets) while 45 percent indicated a preference for premium space. This has put pressure on landlords to uplift B-Grade assets. 

“Premium offices offer a high level of amenities and high ESG credentials,” explains Liu. 

“Think retail offerings, community events and yoga classes. A lot more tenants are focused on delivering the offerings from the broader precinct. If a property management team can create great events, the desire to leave decreases.” 

Liu knows this for a fact from her interactions with premium office clients in the field. 

“They do see the value in it. Most of the clients who engage us value their employees and the employee experience. They’re willing to move into premium assets with great amenity, invest in their people and ensure they know how to use their space and adopt the technology to work more effectively. 

“Higher levels of amenities paired with potentially smaller tenancy footprints are making premium assets a more viable choice for companies who might not have previously considered them. They’ll go to places that have great amenities because they care about that and are happy to pay the rents.” 

While client testimonials can help sway occupier business decisions, verifying the cost-benefit ratio is crucial. Biglands says that the best way to determine whether leasing premium office space is beneficial is to simply look at the decisions being made by other occupiers. 

“Occupiers have the best visibility into the contentment, performance and efficiency of their own workforces. The high demand for premium space and outperformance from a real estate perspective (vacancy rates, rental rate growth) shows that firms believe there is a benefit to leasing premium space. 

“They have made the internal decision that the marginally higher real estate costs add value to their operations and that this type of space makes their workforce happier and more effective.” 

The future of work from office 

Occupier demand for premium space isn't showing any signs of slowing to date.   

“Office is having its retail moment; it's going through a reset, not only from a valuation perspective, but also when you think about how tenants want to use the office space these days,” explained David Southon, Executive Chairman of Aliro Group, in a recent CBRE podcast.  

 “As the market continues to recover from the pandemic, leasing conditions will only tighten, and we’d expect rental rates to continue accelerating,” adds Biglands. 

“Minimal new supply coming over the next three to four years will limit availability of space even further. I don’t think premium space is going to get any cheaper over the near term and there are likely more options now than there will be going forward.” 

And while there could be some growth in peak day visitation across Australian cities, it’ll never reach the levels of the pre-pandemic five-day weeks in Liu’s opinion.  

“We will always have to offer some form of hybrid. It is an employee value proposition, and the next generation will expect some level of it. However, as occupiers look to better utilise and manage space, there could be more flattening of the peaks to spread out office use and ensure teams are coming in together for anchor days.”  

CBRE is currently in the process of moving its Melbourne and Sydney offices. Once complete, they will showcase some of the latest innovations in the workplace.  

“With everything from brokers to valuations to property management and corporate services, we must focus on creating a diversity of workspaces to suit our workforce. These people operate in different ways and we’re increasingly hiring diverse groups of people. We want to support them to realise their potential both in and out of work.” 

Pacific Real Estate Market Outlook 2024

Find out the key trends and overarching themes that will guide market shifts and decision making this year.

An aerial view of Melbourne city from the Eureka Skydeck.