Whether you see it as a blessing or a curse, many of us are experiencing long-term work-from-home conditions for the first time due to the COVID-19 pandemic.
In fact, about 40 per cent of Canadians are working from home once you add office closures to those who were already working from home pre-COVID.
With lockdowns looming or in effect in major city centres, going back to the office could still be a long way away. What does that mean for commercial real estate in Toronto, Vancouver, Montreal and Calgary?
In Q3 2020, Canada’s downtown office markets showed a one per cent increase (2.4 million square feet) in vacancy compared to Q2, and an additional 1.6 million square feet of sublet space for a total of four million square feet of vacant office space (according to CBRE Data) .
“Without question, Canada’s largest office markets are experiencing a shift in demand, and businesses continue to weigh the long-term impact of COVID-19 and the ability to work from home on their operations,” said CBRE Canada vice-chairman Paul Morassutti.
When the economy gradually re-opens, how does this affect the future of office space?
Well, landlord confidence remains high as the Canadian employment market recovers and businesses continue to favour in-person communication to develop business and corporate cultures.
CBRE reports the national average class-A downtown rent of $22.25 per square foot remains in line with the 2019 average of $22.31.
Even though three-quarters of Canadians expect to work from home post-pandemic, industrial spaces in essential labour and logistics corridors continue to be a priority as more and more businesses shift to online retail.
Rental rates remain near their all-time highs set in Q2 2020.
In the early days of the pandemic, many Canadians scrambled to work from and create makeshift office space.
While the benefits of no longer commuting and saving on lunches were a perk, burnout among workers has been spiking. With no downtime or separation between work and home, the mental health and social impact of remaining away from the office and isolated at home has affected staff.
Recently, Jamie Dimon, the CEO of JPMorgan Chase & Co., said his firm saw “alienation” among his younger workers. He was concerned about how working from home will affect productivity and bring long-term economic and social damage.
Return to work
When businesses re-open, companies will likely need more space to adhere to socially distanced, government-recommended protocols. The average square footage per employee was 151 in 2017, compared to 425 in 1990 and 600 in 1970.
Companies will be required to add distance between workstations and optimize shared spaces for employees to congregate.
So, while vacancies are up, the outlook on commercial office space remains strong and will continue to play a significant role in helping companies push through this pandemic.
We will continue to look at the trends as Canada navigates the surges in COVID cases.