The office sector in Australia has been besieged on all fronts since the start of COVID-19. While the initial effects were pandemic-driven, a number of structural headwinds have further weakened the sector. Investors have been cautious, and with this caution there has been a clear flight to quality in the sector, not only from investors but also from tenants who see opportunities to occupy higher-quality office space at good prices.

The headwinds in the office sector have come from various issues:

COVID-19 has embedded a working-from-home culture into office workers since 2020. A lower floor-space ratio for office workers has been building up for a while, before COVID-19 came along. This has been seen over time, first with open-plan offices, and then with hotdesking of employees to reduce space requirements. Companies are reducing their space requirement because staff are working from home. Vacancy levels have increased, with landlords also offe