Average weekly - 63%
Peak Day - Wednesday 73%
Low Day - Friday 40%
Anniversary Index – continued increase in downtown office occupancy.
For the next few Indexes, we have prepared commentaries based on our articles from around the world and research here in Toronto which we believe are the three key takeaways from the four years of COVID impact on downtown Toronto. First office space; then who is coming back to the office; and finally, new mobility challenges and the impact of congestion. But first:
Challenges for the Office Industry
It has been a perfect storm for the office space industry since March 2020. In the beginning, building managers had to find ways to accommodate access to buildings while maintaining safety for workers and conforming to evolving public safety requirements. We then experienced a flood of new construction planned and initiated before the pandemic, which caused an immediate, significant increase in vacancy. This all combined with a plethora of sublets, very few of which were taken up and a new-found interest by major news outlets in the health of office industry. All of this led the general public to conclude that office buildings were a thing of the past.
The business world was also challenged from geo-political disruption and trends towards deglobalization, a transformation in the digital economy, rising interest rates to combat inflation, policy initiatives to decarbonize built form, and finally, uncertainty over the extent to which remote work would have long-term impacts. Safe to say that the last four years were not a great time to be in the office industry.
Industry leaders are now saying at conferences and in interviews worldwide that we have reached the point where confidence is returning, and the commercial office industry is making the adjustments needed to rebound. In other words, we have reached an inflection point in the commercial real estate world of peaks and valleys. Most markets have stabilized from high vacancy levels which were high but not the highest: the mid-1990s earned that dubious honour. Businesses are working through needs for in-office accommodation, redundant buildings have been identified, many of these are being repurposed.
The role of cities has always been to connect people, and role of the office building in doing so will continue to be an important part of downtowns like Toronto’s, notwithstanding the appeal of remote work for those who can.
In the next two Indexes we will comment on:
· Leaders in the return to the office.
· Challenges of post pandemic mobility & congestion.
Your SRRA team.
Links to Articles of Interest
Could Toronto’s CEOs Learn from this UK-Based Leader? Change the Dial and Focus on the Positive
Telling it like is or should be, one of Britain’s best-known CEOs vented his frustration with fellow leaders at a recent event in London: “This is a great country with brilliant places to invest, and London’s the most exciting city in the world. We should be loud and proud about what we’ve got already and build on it for the future.” Could a similar story be told here at home?
World’s Largest Real Estate Conference Calls for Investment to De-carbonize Housing
Top investor offers advice: “Residential is a key piece of the puzzle, and investors globally need to prioritize decarbonizing their portfolios because the sector is responsible for around 26% of all emissions,” he said. “What we need to do is work out how to balance decarbonization while maintaining acceptable costs for occupiers and continuing economic growth.”
Who is Winning the ‘Amenities Arms Race’? JLL Report Sheds Light
The past few years have seen a flurry of investment in all categories of office buildings as landlords and employers look for ways to increase occupancy and leasing activity. The list of ‘winners’ is mostly intuitive (fitness centres with showers rate better than those without, for example) but worth a look.
Office to Res – Move Over, It’s Time for Office to Industrial to Shine
This may not be a universal solution, but keeping office buildings that are past their best before date in active employment uses can make a lot of sense, especially when there is a shortage of good industrial sites….this is how Dallas-Fort Worth is tackling the issue.
Toronto’s New Focus on Developing TPA Sites for Housing Illustrates Need for Better Policy Framing
The pushback was quick as defenders of need to maintain parking supply reacted negatively to council decision to review TPA sites for housing. A carefully framed policy would emphasize the potential to include parking in a multiple use development. And one hopes, insist on leasing the sites rather than selling them.
London Meeting of Minds Reveals Key Insights into What Influences Major Players Need for Office Space
Summed up in this quote from Morgan Stanley official, citing company’s decision to renew at
Canary Wharf: “The sustainability credentials, the accessibility for staff, the overall footprint of the space, the flexibility of the lease. The actual rent is quite low down the pecking order for our organisation. It’s those other aspects that make up the [profit and loss] impact for us.”
Match Your April Fool’s Pranks to Your Company’s Culture
Sage advice from someone who has seen it all, with suggestions on jokes that can actually add value rather than land you in hot water.
“The Occupancy Index is supported by the City of Toronto, Downtown Yonge BIA, and Downtown West BIA. It is a measure of the percentage of office employees returning to the office compared to the number of employees who would normally have come to their offices pre-COVID. For a detailed description of the calculation please contact Iain Dobson at [email protected],”