Companies that embraced work-from-home culture during the pandemic aren’t too keen on bringing employees back to the office. As a result, an increasing number of commercial office buildings across major Canadian cities are being left barren, thanks to what’s becoming a permanent shift towards a hybrid work model.
According to a recent report by commercial real estate company Altus Group, the office vacancy rate in Canada rose to a record high of 19% in March, largely led by the metro areas of Vancouver and Toronto. In contrast, the downtown vacancy rate sat at around 10.8% prior to the pandemic, even during the strenuous times of the oil market crash in 2014 when energy firms rushed to slash costs and office space.
The report highlights that Toronto and Vancouver have among the highest vacancy rates in the country, with rates of 17.9% and 14.8%, respectively. Meanwhile, the vacancy rate in Calgary increased to 27%, in part reflecting the ongoing struggles of the city’s oil and gas industry. The report also notes that there has been an increase in the availability of sublease space as businesses look to reduce their real estate costs.
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Finally, the note also highlights that the pandemic’s impact on the office market is likely to continue in the short term, with many businesses continuing to adopt remote work policies. “Less people are coming in and less space is needed,” Colliers vice president Colin Scarlett told The Globe and Mail. “Employees don’t believe they need to be in the office. As a result, the employer has been delicate on the return to the office.”
Information for this briefing was found via Altus Group and The Globe and Mail. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
