Employees and unions will fight hard for the new-found flexibility to continue. And the once-in- decades period of extremely low unemployment puts workers in a strong bargaining position.

Workplace surveys have shown that flexibility is right up there with pay as most cherished for workers. People have altered their routines and lifestyles around increased working from home. They have baked in lower transport and childcare costs and many have moved further away from the office.

Working from home is here to stay as a trend and with that comes the very real prospect of some offices in Australia never coming back to life. The ramifications for the owners of these commercial office spaces are now becoming evident in Australia.

In the post-lockdown world, working from home is no longer a reaction to a crisis but the new normal. While the emergence of some zombie office space was always a risk, the danger is starting to play out and property investors in this market are spooked.

Charter Hall’s unlisted Direct PFA fund, which owns a $2.45 billion portfolio of office properties, most of which are in Australia’s major CBDs, has told investors that it has limited redemptions, citing “challenging economic and property market conditions”.

The ASX-listed developer and backer of the Direct PFA fund, which had received redemption requests equal to 15 per cent of its equity, paid just 25 per cent of what was requested in February. It would pay another instalment “shortly” and the rest this year, Charter Hall chief executive David Harrison said.

Eight months ago, US giant Blackstone announced one of the property funds it managed would limit redemptions.

Last week The Financial Stability Oversight Council, a group that includes the US Treasury Department, the Federal Reserve and the Securities and Exchange Commission, warned of increasing risks for the $20 trillion commercial real estate industry as vacancy rates for offices across the country grow.

That said, just how this excess office space dilemma plays out in Australia remains to be seen.

In Australia, owners of top-tier office space that is well situated and environmentally friendly can still attract tenants, but at the fringes of the CBD and in the suburbs, office buildings are under pressure.

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Vacancies and higher interest rates were responsible for ASX-listed Dexus, one of the country’s largest office tower owners, wiping $1 billion from the value of its diversified portfolio as rising rates exacted a toll on the commercial property sector.

Meanwhile, some of the country’s largest super funds, including AustralianSuper and Cbus, have cut the value of their office assets.

There is no going back to the pre-COVID situation of crowded offices, so the commercial office sector will have to adjust to the new normal, wherever that lands.