Forget the full return to the office: Remote work is here for another five years, the head of a global commercial real estate services company predicts.
After two years of working from home, office workers have grown enamoured with the arrangement. The big banks and other large users of office space have repeatedly delayed the full return to the office. Some companies have started to give up their office space again.
“The behaviours of COVID made it comfortable and easy for people not to come in. The job market made it easy for employees not to come in,” said Mark Rose, chief executive of Avison Young, a Canadian commercial real estate services company with operations in 16 countries including the United States, Britain, Germany and South Korea.
“Right now, anyone who really wants a job can have a job. If I have a choice between a place that’s mandating five days a week or I can be flexible, I’m going to choose to go to the flexible office,” he said. (Avison has a flexible office.)
Some office employees are quitting or threatening to quit if they can’t work from home. Others are simply ignoring return-to-work-requirements. As employees increasingly demand flexible, remote work, Mr. Rose predicts that the full return to the office will take longer than real estate landlords anticipate.
“The beginning of the full return to office is two years from now,” Mr. Rose said. “I would say the earliest that we’re gonna get everybody back in the office is five years.”
Since the first year of the pandemic, foot traffic has been increasing in major Canadian cities and the national office vacancy rate has declined as tech companies have signed new office leases.
But with a rash of new office buildings opening in downtown Toronto, Vancouver and Montreal, the office vacancy rates in those cities have reached their highest level in two years, according to data from Avison Young.
In Toronto, the financial capital of Canada and largest office hub in the country, the increase in the volume of people in offices recently slowed after a quick uptick in the first four months of this year.
As of mid-May, the volume was about 24 per cent of prepandemic occupancy levels, according to data from consulting firm Strategic Regional Research Alliance. “Employers remain reluctant to insist on returning to the office more than a few times a week,” the alliance said on its website.
Part of the problem is the disconnect between business managers and their employees. Multiple surveys show that business leaders want their staff back in the office full-time. Those surveys show that those same leaders overwhelmingly do not want to be back in the office either.
“Leadership is saying they want everybody back. Leadership is not necessarily coming back. That piece has to flip,” Mr. Rose said.
Sentiment may in fact soon flip. With central banks around the world raising interest rates to bring inflation under control, the global economy is expected to slow. If that leads to an economic recession and people lose their jobs, that will give employers more leverage. At that point, they may start stipulating that employment is contingent on being in the office five days a week.
“I can assure you that employers are going to post job openings that say apply if you plan on coming in five days a week. Just right now, employers don’t have the upper hand,” Mr. Rose said.
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