The Reserve Bank of Australia’s (RBA) push for “full employment” could fuel demand for 1 million square metres of extra office space each year, according to Colliers International’s latest research.
The central bank continues to counter the country’s low wages growth by aiming for an unemployment rate of 4.5%, which could see a surge of employees and put the squeeze on an already-tight office market.
To bring down the current 5.2% unemployment rate to 4.5%—a figure the central bank classifies as “full employment”—by 2025, around 100,000 workers need to be added.
“Full employment” is a level to which unemployment can drop before labour shortages begin to spark wage inflation.
“This means that on the most positive estimations, being if the RBA succeeds in getting Australia to ‘full employment’ of 4.5%, circa 100,000 white-collar jobs would be created each year. This equates to about 1 million square metres of office demand Australia-wide each year,” said Colliers International’s Australian research director Anneke Thompson.
A total of 334,494 square metres of office space will be added nationally during the second half of the year, with an additional 603,566 square metres due to be added to CBD markets in 2020 and a further 667,359 square metres to come online from 2021, according to the Property Council of Australia.
The 1 million figure was calculated by assuming that each additional white-collar employee needs 10 square metres of office space.
“This forecast is quite different to a ‘net absorption’ forecast, as the 1 million square metres of demand will be catered to by a combination of solutions, such as existing vacant space, occupiers becoming more space-efficient, co-working groups, and of course the take-up of more office space,” Thompson said.
