Are Sydney, Melbourne office markets AI ready?

With a top 20 global AI ranking based on a host of measures aggregated by JLL – including infrastructure, talent, operating environments, research and government strategy – and the second highest number of knowledge workers of any country after Singapore, Australia is likely to need 483,000 square metres of additional office space by 2030 due to AI, according to the JLL report The Impact of AI on CRE.

This projection, intended to prepare real estate investors for a wave of new office demand, is modelled off the rapid rise of AI in the United States, specifically the tech hub of San Francisco. It takes into consideration the foothold global AI companies have in Australia (37% have Australian operations), the significant number of home-grown AI businesses and companies that need AI advancement to remain competitive.

“For the first time in years, productivity in Australia has declined, yet it has one of the strongest economic and population growth forecasts globally over the next ten years,” says Ronak Bhimjiani, JLL real estate economist. “Embracing AI’s capabilities will be crucial for realising this.”

Here are five ways AI is about to shake up Australia’s office sector.

A supercharged workforce

The advancement of AI is likely to generate more employment than it will take away. The number of AI-related jobs could soar by 500% by 2030, resulting in an additional 166,400 roles, according to the Tech Council of Australia. New roles will be created for machine learning engineers, software developers, data scientists and AI legal experts and the existing workforce will strengthen with a greater number of highly skilled professionals in these specialised areas.

Flexible office space will dominate

Currently, 26% of global AI companies in Australia occupy flexible workspaces, joining Australian tech startups that are increasingly pursuing small co-working space for short-term projects that align with their scaling needs. The appeal of co-working offices is that they can accommodate five to 10 employees, offer short-term contracts and cost savings, desirable locations and speed to occupancy. Tracking the growth of these companies in Australia will be key for landlords to capture AI office demand.

“As AI startups in the incubator phase enter the market, they will need the ability to pivot office space requirements as they scale up,” says Docker. “The availability of flexible space will be crucial for these companies.” Although, Bhimjiani notes that while flexible working is already deeply ingrained, businesses will still need offices that can accommodate peak occupancy days, especially as more companies adjust their hybrid work policies.

Smart buildings mean smart business

A frictionless user experience in the workplace will be essential for maximising productivity and retaining top talent in an increasingly tech-savvy workforce, the JLL report states. A prime example of this already woven into our workdays are room booking apps which contribute to a more efficient, productive use of space. AI companies recognise the competitive advantages offered by smart buildings and seamless network infrastructure and will seek them.