Pre-pandemic, David Makin’s business model was ideal for staff and customers.
He has 10 cafes in Melbourne’s CBD, all underneath office towers.
“[They’re] Monday to Friday businesses in the city, so no weekends, no nights,” he said.
All 10 have been closed during lockdown.
“We’re heavily reliant on foot traffic into the building. So, without that foot traffic, obviously we’re not selling any coffee,” he said.
Australia’s CBDs have borne the brunt of restrictions during the pandemic, and businesses like Mr Makin’s — Axil Coffee Roasters — have been feeling the lack of office workers keenly.
Early in the pandemic, he had to let some staff go, and turnover this financial year is about 10 per cent of what it was in 2019.
Lockdowns are over, but as Australia’s two biggest cities start opening up there are concerns about when — and if — their CBDs might recover.
Remote working has become an attractive option for many people who want more time and less of a commute, with the Productivity Commission finding the number of Australians working from home has remained high even when previous lockdowns have ended.
Mr Makin is re-opening his CBD cafes this week but is realistic about what business will be like.
He has based his turnover forecasts on the first three weeks of May 2021, when Melbourne wasn’t in lockdown and there was no face mask requirement.
During that period Mr Makin said some workers returned to the office quite quickly, and his cafes underneath private sector buildings got back up to about 80 per cent turnover.
“The problem was the public sector,” he said.
“We were seeing 10 per cent of turnover — only 10 per cent of public sector staff returning to their office.”
He’s expecting it will take six years for his business to get back to its 2019 turnover.
Going remote-first
Katherine McConnell’s business is about as central as it gets — on Margaret Street in the Sydney CBD, right next to Wynyard Station and a couple of hundred metres from the Harbour Bridge.
She’s the chief executive of Brighte, which helps people finance solar and home improvement projects.
Brighte went from 80 staff to about 190 staff earlier this year, and rented extra office space to cater for the growing team.
Ms McConnell said she was considering expanding even further, but then the Sydney lockdown happened.
They’ve recently done a return-to-work survey of staff.
“The most interesting outcome of that survey for me was that 61 per cent of our people told us they wanted to return to the office two days or less,” Ms McConnell said.
“I think one of the big reasons is that people feel they can be more productive with their time by working from home.
“One of the other reasons … is they’re able to better balance their life.”
The business is now re-assessing how much office space it needs as it moves towards a “remote-first” working model.
“We will continue to have a presence in the city, and we’ll continue to grow our footprint,” Ms McConnell said.
“I think [the office will] be largely for collaborative teamwork.”
‘That doesn’t mean CBDs are dead’
While Brighte is thinking about remote work into the future, Ms Connell said the business was likely to offer a hybrid model in the medium-term, allowing staff to split their time between the office and home.
The Productivity Commission expects most workplaces will gravitate towards that sort of hybrid model post-lockdowns.
Ken Morrison from the Property Council of Australia said that didn’t mean Australian CBDs would become ghost towns.
“Yes, more people will work from home in the future than what they did in the past. But that doesn’t mean that CBDs are dead — far from it.”
Figures from the Property Council show Hobart and Darwin, which were largely unaffected by lockdowns, returned to about 90 per cent of their pre-COVID office occupancy levels in September.
Perth office occupancy was at 76 per cent, Adelaide was at 64 per cent and Brisbane was at 51 per cent.
Mr Morrison said some of those cities were still affected by large international companies taking a blanket approach to working from home.
“I think Sydney and Melbourne will get over these lockdowns and back up to that 80 or 90 per cent occupancy,” he said.
“The challenge is how fast we do that.”
After Sydney’s first lockdown, office occupancy rates took almost a year to get to 70 per cent. Melbourne never got over 50 per cent.
Mr Morrison said there wasn’t enough pressure on public sector workers to return to the office last year.
“This is a very important thing that federal and state and local governments can do — they can lead by example.”
The Victorian Public Service will return to a flexible working policy when the state hits 90 per cent vaccination, starting with the expectation that workers will be in the office three days a week.
The New South Wales government says remote working arrangements will vary between its public sector agencies.
Opportunity for CBDs to evolve
Urban strategist and engineer Steven Burgess says CBDs wouldn’t die, but they would change.
“And certainly for a little bit, they’ll probably struggle,” he said.
“But it’s an opportunity for cities to probably become more like they should have been — less business-focused… but more a central activity centre where you live, you work and you play.
“They’re not just for bowing over a desk — it’s for meeting people, it’s for going to lunch, it’s going to the pub, going to the theatre.”
Mr Burgess said some cities, including Portland in the United States and Wellington, New Zealand were already succeeding at that model.
Some city councils are already working on liveability and entertainment.
Sydney is creating more pedestrian zones and public space.
Melbourne is running a campaign to attract more young people to its empty apartments and focusing on events and public art.
Mr Burgess said there would still be an impact for CBD businesses like cafes and barbers if workers only came back to the office a few days a week.
“And that’s the difference between economics and finance,” he said.
“Economically, we’ll survive and those cities will transition. Financially, there’s going to be some people short-term that suffer.”
Katherine McConnell said even if people weren’t in the office every day, when they did come in they would likely make the most of their CBD.
“I do think it’ll be used more intensively; I think that the cafes will be used, I think after work people will be, you know, going for a drink with friends,” she said.
David Makin is looking forward to his CBD cafes reopening, ready to serve workers who do return to the CBD.
“All business owners out there, we have to be optimistic,” he said.
“And that’s the attitude we’ve probably had to have for the last two years — we will survive.”
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