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Employees work at Scotiabank's new office in Scarborough, Ont., on Feb. 4. The Bank of Nova Scotia opened two offices in Toronto suburbs after an internal survey of the bank’s employees found that commute times remained the biggest barrier in staff coming in more frequently.Chris Donovan/The Globe and Mail

Almost six months after many Bay Street employers began mandating a partial return to the office, they are facing a new challenge in getting employees back consistently: steadily deteriorating traffic and public transit in Toronto.

Executives at a number of large white-collar employers headquartered in Toronto’s financial district say that long commute times are a significant impediment in instituting a successful hybrid work model, which would ideally see most employees in the office two or three days a week.

“The commute in Toronto was never great, but it is even worse now, with fewer easier routes by car, and less reliable public transit. So, yes, I am concerned. We do know from internal surveys that commuting is one of the biggest obstacles to getting people back in,” said Tim Murphy, chief executive officer and managing partner of McMillan LLP, a Bay Street law firm with more than 700 employees.

McMillan didn’t mandate that employees come in a certain number of days a week, although the firm recommended that staff come in three days. But Mr. Murphy noticed a clear trend in how and when employees were coming into work. “The easier the commute, the higher the in-office attendance rate. So our attendance rate in Calgary and Ottawa has been the highest, and Toronto and Vancouver, the lowest,” he said.

If employees showed up to work and no one else was there, Mr. Murphy explained, staff had basically traded off a long commute for a benefit that wasn’t materializing. Starting this month, the firm introduced a policy that required all employees to be in the office every Tuesday. “Frankly, I’m trying to create a bit of FOMO [fear of missing out] for the employees who don’t want to come in,” he added.

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The Toronto Transit Commission (TTC) has been thrust into the spotlight in recent weeks after a spate of violent incidents on the transit system, some of which resulted in deaths of commuters. The safety issue came on the heels of the TTC’s admission earlier this year that passengers should expect longer wait times and service cuts in light of continuing budget shortfalls as COVID-19 eases.

In fact, a December, 2022, report by the software company Moovit found that Torontonians endured the third-longest commute times in North America (an average of 56 minutes each way) after New York and Chicago. Torontonians also travel the furthest by public transit – more than 12 kilometres each way – compared with any other North American city, the report found.

But the TTC itself is being affected by hybrid work. Its recent budget noted that reduced in-office days are expected to cost the TTC $350-million in 2024. The pace of ridership recovery, according to the budget, has plateaued at 70 per cent of prepandemic levels.

“We are hearing from our downtown employers that their work force wants to come back into the downtown core, but if it’s taking them an hour and a half one way to get in even just from suburbs around the city, it is simply not worth their time,” said Janet De Silva, president of the Toronto Region Board of Trade. She said the board recently set up an internal committee to study congestion, various traffic “pain points” around the city and to derive solutions.

At a recent meeting, a group board member who works at PwC Canada’s main office in the financial district noted that it sometimes took him 40 minutes to exit the parking garage of the building and turn onto the Gardiner Expressway, a highway that runs across the city, just a block away.

“It’s clear that congestion has become a huge barrier for a full return to the office, and that impacts businesses in the downtown core as well,” Ms. De Silva added.

Life insurance giant Sun Life Financial Inc. SLF-T is still struggling to boost office attendance after introducing a flexible work schedule, according to CEO Kevin Strain. In North America, Mr. Strain said in-office attendance was about 15 per cent – a figure he was unhappy with.

“The biggest thing that’s holding people back, honestly, especially in Toronto, is traffic. It’s brutal,” he told The Globe and Mail in a recent interview. Mr. Strain does not believe low attendance and the company’s hybrid work model has hurt the company, but he would like to see attendance increase to roughly 30 per cent.

In an e-mailed statement, TTC spokesperson Stuart Green said he disagreed that the transit system is impeding an optimal return to the office for downtown workers, noting that service in peak times across the network is virtually identical to prepandemic service.

This month, Bank of Nova Scotia BNS-T opened two new offices in the Toronto suburbs of Scarborough and Mississauga, after an internal survey of the bank’s employees found that commute times remained the biggest barrier in staff coming in more frequently.

The new spaces give employees who live nearby an option for working from a secure location without having to commute all the way to Toronto’s downtown core, according to David Noel, Scotiabank’s senior vice-president of global HR services. He added that the bank is still testing this system out to see how many employees will use it.

The Scarborough location is 6,000 square feet and has 64 workstations, in addition to board rooms and meeting rooms. The Mississauga location is approximately half that size. Both have free parking and on-site food options.

Scotiabank never made it mandatory for employees to return to the office a certain number of days a week, but encouraged people to come in nevertheless, especially for specific team activities and meetings. Tuesdays, Wednesdays and Thursdays are the most popular days at the office, and Mr. Noel said there has been a significant increase in the number of employees coming in since last August, despite commuting issues.

“We tell people that they can come in after rush hour if they want, and if they need to leave earlier and continue working from home, that works, too. We want to allow flexibility,” he added.

There is some evidence that hybrid work has become normal in much of Toronto’s downtown core. Data from the Strategic Regional Research Alliance, a Toronto-based analytics company, show that as of Jan. 15 this year, office occupancy of employees in downtown Toronto was 42 per cent of prepandemic levels. The most popular office day is Wednesdays, when office occupancy averages at 57 per cent.

Accounting giant EY Canada, which employs more than 7,000 people nationwide, is seeing an office attendance rate of 50 per cent to 70 per cent during the week, a significant increase from the same time last year.

And the global real estate company Avison Young’s foot traffic calculator found that in December, 2022, office foot traffic in downtown Toronto was up by 96 per cent from same period a year earlier, but still below prepandemic levels.

Linda Blair, chief experience officer at Deloitte Canada, said she does not envision a future in which working from the office full time will become the norm again. “Physical proximity does not equate to creating culture,” she said. “We don’t want to see employees commute all the way and sit by themselves in the office. That’s not purposeful or deliberate.”

With reports from Clare O’Hara.

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Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 24/05/24 4:00pm EDT.

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