Forces are building to change the face of Australia’s cities forever. It comes at a time when CBDs are under pressure from the work-from-home trend, which many unions are trying to enshrine in workplace agreements, which ultimately will have an impact on what our cities look like.

If there’s one city that’s really feeling the impact of the new attitude to where employees want to work it’s Sydney, with many office blocks seriously reduced in value as tenants reassess what size their offices must be, and what reduced rent they want to pay.

These trends in a work-from-home phenomenon have hit the value of REITS (i.e., real estate investment trusts), which are listed and traded on the stock market.

Charter Hall Long WALE REIT

This highly regarded way to play quality office blocks was a $5.77 stock before the pandemic hit. It’s now $3.46, which is a 40% fall in value!

Not long ago, I had a lunch with Australia’s greatest builder of residential apartments, Meriton’s Harry Triguboff. Harry said he thought office blocks could be good for converting into residential accommodation but there was a lot of government opposition at a planning level that was leaning against such a development at the time.

Well, that could soon change! A report from the NSW Productivity Commission called Building More Homes Where Infrastructure Costs Less reveals that building homes out west added $75,000 to the finish price of such residences. Meanwhile, building in the inner-city suburb of Redfern added only $39,500 to the price of a new home. Meanwhile the extra cost for a home in Baulkham Hills was $114,400! “By comparing the costs of things such as wastewater connections, road congestion, public transport, schools and open spaces, the commission analysed the cost to the economy of additional homes across Sydney, finding a stark contrast in the associated costs of addressing the housing shortage,” the SMH’s Michael McGowan reports.

He tells us that in Appin (near Campbelltown, NSW), where the state government has approved 13,000 new homes, the extra cost of critically important services for a property is $96,000 per dwelling. However, around Sydney Harbour, it would be only $31,000!

This report should be seen as a gamechanger for Australian cities and could easily speed up what I call the ‘Manhattanisation’ of the country’s capitals. This would not only help reduce congestion but breath life back into our CBDs and even encourage workers to come back to their nearby offices!