There is no doubt that COVID-19 has altered the nature of work for the majority of us. Some commercial spaces have continued to thrive, whilst others took an obvious knock.
Industrial buildings have remained resilient to the pandemic. There has been continued and increased demand for these spaces, due to the fact that they are used for large scale storage of items, such as online shopping products or pharmaceuticals.
However, with the onset of new lockdowns and stay at home orders, it’s understandable to have doubts about the future valuation of other commercial spaces, like offices and retail outlets. The reality is actually quite nuanced.
What will our future office spaces look like?
No one can be sure exactly how the pandemic will shape our future workplaces, but it seems clear that working from home (at least in some capacity) is an expectation of many workers moving forward. Many companies have already adapted their policies so that workers are no longer required to be at the office full-time.
Despite this, there is already a rising confidence in the capacity for growth in office valuations. Yesterday, The Australian Financial Review reported a very significant deal. Dexus, the country’s largest owner of office towers, have secured a $1.4 billion deal to develop Atlassian’s Sydney headquarters. This is big news for the valuation of CBD office spaces that have been hit hard by the pandemic.
According to The Australian Financial Review, Dexus is going to fund the already approved Atlassian development while retaining at least a 50% equity stake and being open to third-party investment. Atlassian will take a 15-year lease tenancy of the entire building.
As the AFR explains, “the enthusiasm for new office development shared by Dexus and Atlassian will also help set a fresh benchmark on pricing, with industry pundits expecting the yield of the completed tower to fall below 4 per cent, a clear pointer to its strong valuation.” – Nick Lenaghan
Atlassian are one of the aforementioned companies who have already adapted to the changing nature of workplaces, informing employees last year that they would be allowed to “work from home forever”.
The pandemic has instigated workplace flexibility, however lockdowns have also highlighted the problematic side of employees being separated from their co-workers. Atlassian’s large-scale investment in a CBD office development is a noteworthy show of confidence in the future of office spaces.
Their vision is for a new kind of workplace. For a start, the building itself will be a carbon offset 40 level concrete-and-timber office space, projected to be the world’s tallest hybrid timber building. The offices present an opportunity to reshape the traditional office layout with more breakout spaces and meeting rooms for staff to gather and work together collaboratively. Flexibility for workers will still be offered, however the idea is that an innovative physical office location will be a drawcard for workers to come together.
It’s certainly an impressive enterprise and one that’s worth following if you’re interested in the future of office spaces in city centres across Australia.