Work is changing. Computers are becoming more and more powerful, and new technologies such as video conferencing are enabling employees to work from new environments, such as home.
For the latest generation, the topic of water coolers is more than just sitting next to the water cooler in the office. It's about having the flexibility to do what you need to do while still living your life around work.
Hybrid and remote working arrangements are a great perk for offices, and for many Melburnians, a perk that can be useful in some situations. If you work in a management role or are studying for a Master's degree in Leadership, you probably understand the importance of creating an environment that supports your team.
What does this mean for businesses operating around office buildings? Is this the end for CBD coffee shops? As you'll soon discover, Melbourne may be experiencing major changes in the way people get around the city, but the challenges facing businesses are not impossible to overcome.
Are Melburnians avoiding offices?
For many office landlords, declining office occupancy raises a simple question. Why aren't Melburnians returning to their offices while occupancy rates continue to rise in other states?
The answer lies in the unique circumstances Melburnians have experienced over the past decade.
Melbourne's CBD has experienced significant change in recent years. It's true that the pandemic has shut down large parts of the city for the better part of two years, but Melburnians have been away from public life for much longer than that.
Construction hoardings and blockades have taken over large parts of the city as major infrastructure projects such as Melbourne's underground tunnels get underway in earnest. Coupled with Melbourne's reputation for contested space, from flash mobs to protests, this creates a unique opportunity for workers to avoid the CBD wherever possible.
These disruptions are impacting employees' attendance at the office, forcing them to reconsider whether they need to go to the office to get their work done. After all, the benefits of modern technology have meant that many office-bound Melburnians can now work from home, free from the construction noise and protests that surround the city during working hours.
CBD business challenges
When office occupancy rates decline, the ripple effects are felt throughout the local business environment. From cafes to retail stores, these businesses rely on foot traffic from office workers, making Melbourne's CBD an important hub for the Sino-Japanese economy.
A prime example is retail outlets such as Southern Cross Station, one of Melbourne's major transport hubs. More than 60 million passengers pass through the station each year, but it has struggled to retain tenants and more businesses are closing.
Melbourne is famous for its nightlife, with major sporting, arts, music and cultural events taking place. There are few places in the world that can draw nearly 100,000 people into a stadium for a Taylor Swift concert. Melbourne's fantastic nightlife means that large-scale events of this kind are held on a fairly regular basis.
However, the challenge for CBD businesses is that the footfall associated with nighttime events is not quite the same as daytime traffic. A cafe that opens at 7 a.m. for the food court breakfast rush is unlikely to open at 7 p.m. to feed hungry soccer crowds. Customers looking to attend a concert rarely need to do any dry cleaning after the show.
Fundamentally, the flow of people during the day is very different from that at night, posing unique challenges for businesses operating in Melbourne's CBD. Is it possible to run a business in a way that allows day workers and nightlife enthusiasts to take advantage of the opportunities available to them?
Changes in customer traffic generate new ideas
For one lobby group, changes in customer behavior are forcing a rethink of trading hours at the core of the business. In recent months, a new report by the Australian Retailers Association has found there is an opportunity for retailers to adjust trading hours to give customers more freedom and link daytime and nighttime trading. This is something that is rarely seen in urban areas.
The Twilight Trade Project is working with the Victorian Government and the City of Melbourne to actively explore the possibility of changing standard trading hours for businesses to a later closing. The company is exploring ways to harness the power of increased evening foot traffic to provide a valuable trading lifeline to businesses struggling with construction disruptions, the pandemic and the resulting disruption to tourism.
Australian Retailers Association researchers used data available from the City of Melbourne's Pedestrian Counting System, a dataset that collects anonymous, real-time pedestrian data through a variety of sensors, for the period 2019 to 2023. We identified changes in pedestrian commuting patterns over the period.
The report specifically found that pedestrian behavior had changed. Rather than sticking to the office and heading home immediately after work, employees who finish late tend to gravitate towards social venues – Melbourne's nightlife. The research involved several stages, including a trial known as Live at Errol Street, which produced promising results.
Responding to a changing work environment
With office occupancy rates in Melbourne at record lows, businesses trading during the day will need to consider how to survive in a changing environment.
It may be a while before Melburnians return to their offices, and in some cases they may never return, but industry and government are ensuring CBD businesses survive the challenges ahead. I am working hard on this.
We may not know what office occupancy will look like five, 10, or 20 years from now, but we do know a lot of things for sure. Nightlife continues to thrive in Melbourne, with concerts from major artists, cultural showcases like the Melbourne International Comedy Festival, and sporting touchstones like the AFL Premiership season.
Melbourne as a city will continue to grow. If demographic predictions come true, Melbourne could become Australia's largest city in 10 or 20 years.
In a world that has changed so much over the past decade, will customers return to stores? Time will tell eventually, but for now at least, there is hope for retailers in Melbourne's CBD. Looks like you can have it. There's a chance. Today's retailers need to seize the opportunity.
