In the Knight Frank Australia’s 2022 Outlook Report, chief economist Ben Burston said the pent-up demand for office space in 2022 would boost absorption rates and drive market recovery.

But he said the recovery will take place against a backdrop of an ongoing debate on workplace dynamics and uncertainty over businesses’ exact space requirements post-pandemic.

“These pressures will likely mean that absorption is unlikely to rebound quite as strongly as it has in previous global economic recoveries in the early 1990s and post-global financial crisis (GFC) period, but instead more closely resemble levels of demand similar to those experiences in 2015-2018.”

He added that new developments would be in demand as tenants would want offices designed to offer flexibility to attract staff away from home in the post-pandemic environment.

“Over the course of the pandemic, Australian employees have become accustomed to much more flexible working arrangements, and businesses will have to adjust not only their physical office spaces to suit these evolving demands, but also their policies along with it,” he said.

“Our research shows that many tenants will look to upgrade their office space in 2022, and as such, we expect premium and upper A grade space to be at the forefront of the resurgence in demand with more generic space less likely to be perceived as the compelling office of the future.”

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