More people are going to the office more of the time. Offices are still in trouble
For a while, the tug of war around hybrid and remote work has seemed primarily about productivity, collaboration and work styles. But as remote work has become a more permanent feature, the offices that many assumed would eventually be filled by someone have stayed empty.
Office vacancy rates remain stubbornly high ― here in London, a recent report pegged the downtown office vacancy rate at around 25 per cent. And as we get to the middle of 2023, those vacancy rates are now starting to look less like a pandemic blip, and more like a permanent shift in what resources the workforce needs.
For the commercial real estate sector in North America and beyond, it’s starting to become a very worrisome problem ― and folks are starting to wave the warning flags.
“Offices are struggling perhaps more than most casual observers realize, and the consequences for landlords, banks, municipal governments and even individual portfolios will be far-reaching,” writes real estate reporter Dror Poleg in The Atlantic.
The notion (hope) that employers pushing return-to-office plans on their workforce would help to bail out the office sector has come up against workforces not all that enthused about it ― with many employees growing suspicious of corporate messaging about collaboration and teamwork being the true reasons for an RTO push.
“Workers think things like: the government is pressuring [the banks] so that the downtown businesses can be supported, or that management secretly believes they’re not really working from home,” said Chris Ford, president of Intelliware in Toronto.
And then there are the firms that are seemingly more than happy with remote arrangements. For every high-profile company forcing workers to return to the office, another lets them work where they wish.
The result of all this is that the rubber is starting to meet the road in terms of rethinking how downtown infrastructure is used. So far, there has been little momentum to teased plans for residential conversions, even as class B and class C real estate flounders. On paper, the case for converting office buildings to residential apartments is compelling. On the ground, however, some of the few developers who’ve completed office building conversion warn of how difficult and pricey the work can be.
“The financial towers are more than half empty now,” writes Christine Dobby in the Toronto Star, and their very purpose is, for the first time, being questioned.”
But, as Poleg also points out, it is nothing if not a chance to do things better. “This crisis,” he writes, “like all crises, also represents an opportunity to reconsider many of our assumptions about work and cities.”
Content written by Kieran Delamont for Worklife, a partnership between Ahria Consulting and London Inc. To view this content in newsletter form, click here.