While residential property markets have performed well over the holiday season, the situation with offices is less rosy.

On the surface, base rents have risen modestly, suggesting that the market for offices is doing okay despite widespread work-from-home policies.

What these statistics don’t take into account is the rapid spike in incentive beings offered to keep offices tenanted.

When you consider the value of these incentives, the effective rents for offices have dropped 11.3% in the Sydney CBD. Outside the CBD, the drop was lower but still significant, at 7%.

Melbourne, with a much longer lockdown and lingering workplace restrictions, has it worse. Effective rents for Melbourne CBD offices dropped 12.2%.

However, it’s not all doom-and-gloom: there were signs of increasing activity in the fourth quarter, as well as several large transactions that may inject life back into the market.

But the long-and-short of it is that the future of office rents remain uncertain as we await how society as a whole will adopt or reject remote work procedures as an ongoing part of daily life.