Tech Giants and Others Scale Down Amid Rise of Remote Work
Big technology companies like Salesforce and NTT, along with others like AGL, American Express, and NBN, are giving back office space they don’t need anymore. More people are working from home, and some companies are cutting jobs. This is changing how much space they need in their offices.
Salesforce, for example, used to rent a big building in Sydney but now needs much less space. Other companies are doing the same. Some are even renting out their extra space to other businesses.
A report shows that the amount of space companies are trying to sublet in Sydney has grown a lot since last year. Utility company AGL and tech company NTT are among those who have chosen to sublet some of their space.
Some banks are also offering their extra space to others. For example, Westpac has rented some of its space to TPG.
But not everyone is adapting quickly. Some office space providers are losing out to other businesses like The Commons and We Work, which are taking their customers.
However, not all office spaces are being left empty. Some new buildings in good locations are still attracting renters. For example, Investa is building new offices in Sydney, and there’s strong interest in them.
In Melbourne, companies like ANZ Bank and NAB have space they’re looking to rent out, while Australian Super and NTT are also renting out some of their offices.
Telstra has a large space available but will only sublet it for two years since that’s all that’s left on their lease.
All this extra space coming to the market shows that landlords are facing tough times, and some funds are even struggling to sell their buildings.
One fund, Charter Hall’s Direct PFA Fund, is even limiting how much money investors can take out because they can’t sell buildings at good prices.
The uncertain economy is affecting property funds, too. A recent index showed a negative return in the second quarter of 2023, mostly because of office funds losing value. Overall, offices lost -5.2% in value, leading to an annual total return of -4.4%.