Expiring APS office leases a 'huge opportunity' to save millions: property expert

More than 1 million square metres in Commonwealth office leasing was up for grabs in the next five years, representing a potential of up to $200 million a year in government savings, according to former Finance Department official and Australian Strategic Property Advisers managing director Stephen Oxford.

It comes nearly a decade after the Abbott government announced it would slash government wastage by cutting down and consolidating unused office space.

But despite a requirement for APS offices to provide a maximum of 14 square metres per public servant, the latest figures showed more than half of public service agencies were not compliant with the space wastage rules.

During a panel discussion following the Thursday release of the Property Council of Australia's latest office market report, Mr Oxford said that number might not remain stable in years to come, particularly following the federal election this year.

He said, according to his figures, there was 1.34 million square metres of government office space, representing more than 75,000 work points due to expire in the next five years.

"This is a huge opportunity for an incumbent government," he said.

"We're talking about $185 million a year that a new finance minister could announce as savings later this year."

The office market report also showed building vacancy rates in Canberra were at their lowest in 14 years.

Vacancy rates are based on whether a building has been leased, regardless of whether employees were working from the office or from home.

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Despite COVID-related lockdowns and working-from-home directions, Canberra's vacancy rate ranked second lowest across Australia's capital cities and stood at nearly half the national average.

A higher density of public service tenants in the nation's capital, representing around 50 per cent of the market, and a preference for long-term lease agreements, were among the reasons for the strong figures.

But Mr Oxford warned office building owners and managers vacancy rates weren't likely to stay down.

During the global financial crisis, the public service grew by nearly 15,000 jobs and vacancy in Canberra dropped to 8.9 per cent, he said.

A later shift to fiscal austerity measures, however, resulted in 10 per cent of the public service being cut and vacancy rates soaring to 14 per cent.

"We are right at the edge of this happening again now," he said.

"I still have reservations, given the current economic climate, about the size of the public service growing.

"I think both the public sector, and the consultancies that support it, will contract over the coming years and I think that decreases demand for office space."

The Finance Department, which helps to make sure leases are efficient, deliver value for money and meet the operational requirements of entities, collects data on how many agencies' leases meet the target, and releases the data each year in an annual report.

But the department has previously told The Canberra Times it has no mechanism to issue warnings, fines or penalties to agencies who haven't complied with the target density.

With more than half of agencies still failing to hit the efficiency target despite being in effect for nine years, Mr Oxford said it was time the Finance Department compelled the public service to.

"This is giving the government the information it needs to make smart decisions," he said.

"To me, that is a good investment."

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