According to Colliers’ Q3 National Market Snapshot, many business leaders in the GTA have doubled down on return-to-office work initiatives.Adetona omokanye/The Globe and Mail
With 85 per cent of employees now expecting a hybrid work experience, the pressure is on for employers to deliver. Businesses have had to rethink their entire value proposition to both recruit and retain, says Sheila Botting, president of Americas professional services at Avison Young.
Ms. Botting spoke at a recent webinar hosted by the Canadian Urban Institute (CUI) on trends and opportunities for revitalizing Canada’s downtown centres, including strategies to transform vacant commercial and office spaces. Attracting more area traffic, including workers, is an essential part of the solution, she said.
“The second you offer a high-performance or exciting workplace, whether it’s the physical building, the trophy assets, downtown location or great corporate culture, suddenly you can attract more people back to the office,” she said. “People want that experience, and so traditional environments need to be modified – for example, instead of sterile marble lobbies, we’re seeing more hotel-type experiences with coffee bars and restaurants.
If I didn’t have a flex work policy at my company today, chances are I would resign and go to another company that would allow me to work from home two or three days a week.
— Sheila Botting, president of Americas Professional Services at Avison Young
“If I didn’t have a flex work policy at my company today, chances are I would resign and go to another company that would allow me to work from home two or three days a week.”
Jamieson Jackson, managing director of the office practice group for the GTA, at Colliers, says many tenants are still renting the same amount of office space as before, but using it in different ways.
“It’s now more about collaboration space and less about cubicles – more meeting rooms and ways for teams to interact. We’re also seeing an evolution of what companies are saying needs to be done face-to-face, versus remotely,” he says.
“Hybrid work wasn’t born out of the pandemic,” he adds. “It was just accelerated. As office attendance is generally higher in the middle of the week, compared to Mondays or Fridays, we’ll need new ways to measure what full office occupancy looks like.”
Companies are exploring a variety of amenities to bring employees back, including major game-changers like onsite daycare. “There’s also a flight to quality – we see vacancy rates in Triple A buildings in Toronto at 4.6 per cent right now versus more than double that in B class offices at 11 per cent,” Mr. Jackson says.
Rebuilding downtowns into more complete neighbourhoods where residents can live, work and play is a complex endeavour that can serve as not just a major recruitment and retention tool but also a catalyst for profound societal change.
Earlier this year, Hudson’s Bay Co. gifted its flagship store in downtown Winnipeg to the Southern Chiefs’ Organization (SCO), in what has been praised as the largest act of corporate reconciliation in Canada.
The six-storey, 60,000-square-metre building will be restored and transformed into a multiuse property that will include a child-care centre, art gallery and museum, multiple restaurants, and a health centre offering western and traditional medicine.
In addition to nearly 300 affordable housing units, it will also have SCO offices as well as a place of reflection to honour victims of residential schools.
“By providing social and economic opportunities, the space is really going to help us be a strong part of the downtown,” said Jennifer Moore Rattray, chief operating officer of SCO, who was also a panelist at the CUI webinar.
“We hope it begins to change the trajectory of our people in the Winnipeg downtown,” she said. “By providing a main-floor public space for everybody to come together, to learn and grow, and help repair and heal our city – which has been called the most racist city in Canada – we can be a real force for good and for change.”
The six-storey, 60,000-square-metre building will be restored and transformed into a multiuse property that will include a child-care centre, art gallery and museum, multiple restaurants and a health centre offering western and traditional medicine.No. 10 Architects
Colliers Snapshot for Q3
According to Colliers’ Q3 National Market snapshot published this fall, many business leaders in the GTA have doubled down on return-to-office work initiatives. Some major tenants who previously embraced more flexible hybrid policies are now mandating at least two or three days a week in the office, citing culture and productivity reasons. At the beginning of September, downtown office occupancy was just under 30 per cent.
Overall office vacancy decreased in half of Colliers’ tracked markets. Suburban vacancy rates are almost universally lower than downtown because of appealing features such as lower rents, free parking and shorter commutes.
Close to 70 per cent of all new office construction is still downtown, with 94 per cent of construction in downtown in Toronto. Vancouver tends to be more evenly split, while the suburbs dominate in Calgary and smaller markets.
Conversions in Calgary’s downtown core continue to focus on office-to-multifamily, leveraging funding from the City’s Downtown Calgary Development Incentive Plan. Roughly 750,000 square feet of office space has either been confirmed or is already under construction.
The industrial market in Calgary kept up the momentum throughout the summer, with decreasing vacancy rates driving up net rental rates. Because of the lack of available market inventory, landlords are less willing to fund improvements or offer free rent to the extent they have in the past.
Mr. Jackson says most of the companies Colliers talked to believe the office is an “important portion of their tool kit.”
“Ultimately, people invest in office space because it helps them build their business.”