Just when most of us thought we had an office glut with lots of Australians doing the pandemic pivot to work from home, we now learn that there’s actually an office shortage in Sydney! But wait, more information is needed to understand this office oddity.

You see, as Aaron Patrick of the AFR reminds us: “Over the past year, Charter Hall shares have fallen by 20 per cent, Dexus shares are down 12 per cent, GPT Group shares are off 0.5 per cent and Lendlease shares have dropped by 26 per cent. Mirvac, which owns the EY Centre at 200 George St, is up 12 per cent.”

Why? That’s simple — it’s because the work-from-home trend has reduced the need for a big office for many businesses. It means thousands of businesses are looking for smaller and/or cheaper premises with their staff voting with their feet to do more of their work from home.

It’s why I’ve reduced the exposure to property for a lot of my financial planning clients. However, like a lot of market and economics stories, one explanation doesn’t necessarily explain all situations.

Aaron Patrick has surprised a lot of AFR readers revealing that there’s actually a shortage of offices “for bankers, lawyers and fund managers.” Via Colliers MD, Cameron Williams, Patrick reveals that while 30% of Sydney office space is empty for the top office blocks in the city, rents have risen 11.4%.

However, this is a tale of two cities, where most businesses are in non-prime core buildings that banks, top law firms and sensationally successful fund managers want to occupy to show off their credentials.

Patrick reveals the top-level buildings. In case you’re wondering, here they are: “… 1 Chifley Square, 1 Farrer Place, 200 George Street, Aurora Place, Deutsche Bank Place, Gateway Sydney, the Salesforce Tower and Quay Quarter Tower.”

Undoubtedly, some of the skyscrapers at Barangaroo would also be like honey to the busy bees in banking, law and funds management.

These businesses are price-makers, not price-takers, so they can afford the best and pay the price to get it.

Of course, there’d be other business types looking for prestige spaces in the CBDs of our top cities and, ultimately, it will be determined by the success of the operation and whether it has a need to look globally top notch. If that’s the case, then your building is a flag in the terra firma that you’re a major player, so position is important whatever the rent is.

That said, if we hadn’t gone through the pandemic and discovered the joys/benefits of working from home, there’d be more competition for these prime core buildings and the rent rise since 2021 would’ve been more than 11.4%.

At the same time, the likes of Lendlease wouldn’t have seen its share price drop 26% and Charter Hall’s by 20%. To see the pandemic’s effect on office block owners, understand that Lendlease’s share price is down 60% since just before the Coronavirus crash smashed share prices and led to the work-from-home trend.

As I’ve said, this is a tale of two cities and even a tale of two economies, where some businesses are flying high, while others are still coping with the many fallouts of the pandemic.

With the help of JobKeeper and appreciative employers, many employees only had to cope with lockdowns and the emotional consequences of that change to life, which included working from home. On the other hand, many businesses lost two years of profit, while others had to cope with two years of losses, back rents and taxes to pay, along with a workforce that’s become more demanding since 2020.

These aren’t the bankers, lawyers and fund manager businesses who’ll pay for the prestige of a world-class building in a high-end location, but there are a lot more struggling operations out there, who are still reeling from the lockdown era.

Nowadays, these businesses are having to wrestle with elevated interest rates and high inflation for the ‘stuff’ they need to buy to conduct their business. There’s even a concerted push for higher wages from unions and workers.

And then there’s the mortgage cliff that’s set to curtail consumer spending during this half of this year.

I really hope the Reserve Bank and its new Governor Michele Bullock are across all of this before they think about raising rates again.