Where did you work during the COVID-19 pandemic?November 13, 2020
As governments enforced closures, many of us quickly created make-shift offices within our homes and worked alongside partners, children and even family pets. No longer did we worry about the commute to work or the line-up at the drive-through.
According to one of Canada’s leading consultant firms, as of late March 2020, nearly five million Canadians who normally don’t work from home were doing so.
If we add those who normally work from home as well, then 40 percent of Canadians worked in their homes every business day.1
As we pass the eight-month point of the pandemic in Canada, we know no sector of the Canadian economy was left untouched by the COVID-19 pandemic.
So, as Canadians worked from home, what happened to commercial real estate, in particular, office space, in Canada?
According to the world’s largest commercial real estate services and investment firm, the third quarter of 2020 shows that the vacancy for office space in major metropolitan areas was up.
“Without question, Canada’s largest office markets are experiencing a shift in demand and business continue to weigh the long-term impact of COVID-19 and the ability to work from home on their operations,” said CBRE Canada Vice Chairman Paul Morassutti.
In most Canadian downtown centres, vacancy rates rose over the third quarter by 100 to 200 basis points.2
As the economy gradually reopens, how does this affect the future of office space?
For employees, there is a sense that they can or want to work from home. According to Deloitte, three-quarters of Canadians expect to work from home post-pandemic, while two-thirds said they would like to work from home more often.
Should we worry about the state of office space in Canada as an investment if Canadian workers feel this way?
Right now, companies are re-opening and, with that, know that the mental health and social impact of remaining away from the office and isolated at home can and has affected their staff.
In the early days, working from home seemed to be a blow to office space, but as time goes on, the thrill is wearing off and people are seeing the benefits of working in an office with others (as it provides for more efficient communication, etc.) and allows a company to build a culture (which is hard to do with remote workers).
Recently, Jamie Dimon, the CEO of JPMorgan Chase & Co., proposed a return to work for his employees. As a result of work-from-home, he said his firm saw “alienation” among his younger works and he was concerned how work-from-home will affect productivity and could bring long-term economic and social damage.3
As well, to maintain the socially-distanced, government-recommended protocols, businesses may need more space to re-organize safely. Right now, the average square foot per employee was 151 in 2017, compared to 425 in 1990 and 600 in 1970. Companies will put in more distance between workstations and optimize shared spaces for employees to congregate.4
Companies may also consider moving to suburban markets rather than downtown cores because of the smaller population density and employee concerns about commuting with local transit to major city centres.
Office space will continue to play a major role in helping companies push-through through this pandemic and we will continue to monitor these trends in Canada.
1 Stewart, Duncan & Baxter, Debbie. (n.d.). Office space, working from home and COVID-19. Deloitte. Retrieved from https://www2.deloitte.com/ca/en/pages/technology-media-and-telecommunications/articles/tmt-predictions-covid-19.html.
2 CBRE. (2020, September 28). Canada Office and Industrial Quarter Stats Q3 2020, Retrieved from https://www.cbre.ca/en/research-and-reports/Canada-Office-and-Industrial-Quarter-Stats-Q3-2020.
3 Davis, Michelle F. (2020, September 28). JPMorgan says most consumer staff to work from home until 2021. Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2020-09-28/jpmorgan-says-most-consumer-staff-to-work-from-home-until-2021
4 Stewart & Baxter, 2020