Before COVID-19, working from home was an option that many businesses made available to their employees. But during the height of the pandemic, fully remote work environments became the norm throughout much of the world. Australia was no exception to that global trend. Indeed, according to a survey conducted by the Australian Institute of Family Studies, amid the lockdown, more than two-thirds of full-time workers nationwide were either sometimes or always working from home. This compares to only 42% who worked remotely prior to COVID.
With many businesses deciding to keep these work-from-home policies in place because they've had success with them, conventional wisdom might suggest commercial real estate leases are poised to dwindle, which has been the case in other parts of the world like the United States and Japan. But as a newly released report suggests, the lockdown appears to have had the opposite effect in Australia, with sales reaching an all-time high.
In 2021, commercial property sales totalled $70.8 billion, according to a report from Real Capital Analytics obtained by The World Property Journal. That's an increase of 69% compared to 2020.
Sales led by office and retail buildings
Given some work environments don't allow for employees to telecommute, it may come as little surprise that retail buildings were among those properties that experienced the highest levels of transaction activity. However, purchase volume was also robust among traditional office places. Office sales in Sydney rose 48% compared to 2020, the report found, with the majority of buyers — 60% — located overseas.
Benjamin Martin-Henry, head of real estate research at Real Capital Analytics, noted the data clearly suggests a return to normalcy — and to work.
"After a slow start to the year, the office sector is now flourishing," Martin-Henry said. "Volumes have eclipsed 2020 levels and are on par with pre-Covid averages as investors show renewed confidence in the sector."
Office sublease availability has also diminished, despite the lengthiness of the government-mandated lockdown measures relative to other countries. In the penultimate quarter of 2021, sublease space in Adelaide, Brisbane, Perth, Melbourne and Sydney fell nearly 9.5% on a quarter-over-quarter basis, according to global commercial real estate services firm CBRE.
If you decide to rent or buy, WMC Accounting can help you map out a plan and the tax ramifications that result. Contact us today to learn more about our comprehensive accounting services for commercial real estate matters.