2022 Year End Commentary
A puzzling year for employers and employees.
This year-end round of links to articles from around the world has all the familiar ingredients that make the current decision-making environment around work from home vs returning to the office so chaotic and unpredictable. The only discernible trend is towards conflicting points of view!
Take productivity. For every report that company performance is not affected by remote work conditions you will find another that condemns the practice. Protecting or enhancing office culture? From conflicted tech CEOs to disillusioned young professionals to concerned HR specialists, the jury is not just out it’s in danger of losing credibility. And while you will read about concerns over the economic impact on downtowns resulting from the absence of office workers, you will also read about consultants willing to predict the end of office space.
Those who predict the end of office space and the transition of those buildings to residential are equally rebuffed by professionals in the office industry who are not seeing evidence of this transition beyond normal market fluctuations.
Perhaps the only truly predictable factor revealed in these links is that when office workers stay home, the financial ecosystem which supports office workers and a city’s transit system faces financial hardship. When transit systems lose commuter traffic revenue mobility for everyone is impacted adversely. That’s as true for Toronto as it is for New York, Chicago, Paris, Frankfurt, San Francisco, or London – which, you may recall, is where our investigations into the impact of COVID began in the spring of 2020.
Downtowns thrive on complexity, and, we trust, will continue to function as a principal meeting place for collaboration and innovation. The people responsible choosing the Oxford ‘word of the year’ could well have picked ‘hybrid work’ – more ink has been spilled on preferences, predictions and predilections on this topic than even Google can keep track of. Meanwhile, SRRA’s Occupancy Index continues to provide you with a reliable source of data on office occupancy in downtown Toronto – knowing that our numbers have relevance to the region as a whole as well as office clusters in cities across the country.
Backtracking on Work from Home – some big tech players starting to re-think whether allowing remote work is a good idea long-term.
With companies like Salesforce (which owns Slack) tinkering with their employment policies, executives continue to seek a balance between getting the job done and keeping their best workers. CBRE’s Julie Whelan (head of ‘occupier research’ for North America) comments, “I think a lot of it depends on earnings and how companies are doing, especially with a looming recession…that's when you'll start to see companies maybe change stance, if they feel that their performance is faltering and that it has something to do with folks that are not coming into the office.” SNAP is another company that has moved from ‘work anywhere’ to requiring at least 80% of an employee’s time in the office. Hard to know if similar thinking will translate north of the border but SRRA’s occupancy index remains a reliable indicator of how firms in downtown Toronto are feeling about hybrid working. The change in mood is not restricted to the tech sector. At least one U.S. bank is suggesting that “collaboration and culture” has taken a hit over the past two or more years with employees working remotely.
https://www.bisnow.com/national/news/office/the-future-of-work-is-hybrid-experts-say-even-if-office-landlords-dont-like-it-116725?utm_source=outbound_pub_16&utm_campaign=outbound_issue_63231&utm_content=outbound_link_5&utm_medium=email
Rocket science it isn’t. But the Federal government decides to mandate at least two days in the office for reluctant federal employees who have become used to doing work from home.
In a move welcomed by Ottawa’s chamber of commerce and others concerned with the economic well-being of downtown Ottawa, the Federal government has chosen to push back against public service unions, who seem to believe that working remotely should be enshrined in collective agreements, by requiring staff to be in the office at least two days a week. “We have rediscovered the value of shared in-person experiences that are essential to cohesive, collaborative and high-performing organizations,” says the Treasury Board.
https://www.msn.com/en-ca/news/canada/breaking-ottawa-mandates-public-servants-to-return-to-office-2-to-3-days-per-week-by-april/ar-AA15kgEq?ocid=msedgntp&cvid=1d91c0dba09c409f8c88b68140db1a45
Dust to rust. U.K. billionaire calls Britain’s plans “to extend employees’ rights to work from home…economically illiterate and staggeringly self-defeating.”
Never one to suck up to politicians (except occasionally Boris Johnson), Britain’s second most wealthy man Sir James Dyson is blowing volumes of very cold air on ideas floated by government leaders. The man who single-handedly reinvented vacuum cleaners and washroom hand dryers has lashed out against the government’s plans to entrench the right to work from home. “Without control over where employees work,” he has said, “companies like Dyson hesitate to invest in the UK.” With more than 14,000 employees, Dyson is no high street shopkeeper. Time will tell if his words have a lasting impact. The man who stared down U.S. giant Hoover at the outset of his career, is clearly not in a mood to go with the flow.
https://www.msn.com/en-ca/money/news/billionaire-james-dyson-says-letting-people-work-from-home-is-staggeringly-self-defeating-and-will-cause-friction-between-employers-and-employees/ar-AA15aDoK?ocid=anaheim-ntp-feeds&cvid=da24e3232f714bd7b6e951ae0d4da951
Is the novelty of remote working wearing thin? Job search descriptions may tell a tale.
This is an update on a report covered by this page a few months ago that looked at Linkedin profiles. Could younger workers have an outsized impact on the future of where we work?
https://www.msn.com/en-ca/money/other/the-novelty-of-remote-work-wears-off-for-job-seekers-as-a-new-mentality-takes-over/ar-AA12Til6?ocid=entnewsntp&cvid=f4342d5051de45b386fbcabf5982e7e9
U.S. downtowns suffering as workers resist returning to their offices. Is the ‘office-centric’ downtown a thing of the past, Business Insider asks?
Even though the U.S. has so many more large cities and therefore a larger overall distribution of office space than Canada, current trends – as reported in the article below – cannot be ignored. Optimists on this side of the border will no doubt hope that this is just another example of clear-cut differences between Canada and the U.S. A New York Times article adds that downtown San Francisco is a ghost town, with office workers having resisted attempts to lure them back. Similarly in Melbourne Australia, downtown foot traffic in Victoria’s largest city is reportedly at all-time lows.
https://www.businessinsider.com/remote-work-gutted-city-downtowns-office-real-estate-apocalypse-2022-12
Another marker that Canada would do well to avoid – politically divisive measures to clear away encampments occupied by the unhoused, but….
Portland is just one of many U.S. cities resorting to desperate steps to deal with increasing levels of homelessness. In L.A., more than 50,000 are ‘sleeping rough.’ In New York, Mayor Adams is seeking authority to force homeless people into hospital if police determine they are mentally ill. Before we get too self-righteous, however, consider that Vancouver is proposing to do the same thing.
https://www.smartcitiesdive.com/news/portland-oregon-passed-a-controversial-homelessness-mitigation-plan-here/636760/?%3A+2022-12-6+Smart+Cities+Dive+Newsletter+%5Bissue%3A46479%5D=
and
https://www.wsws.org/en/articles/2022/12/05/giut-d05.html
and
https://www.theglobeandmail.com/opinion/article-hospitalizing-homeless-people-with-mental-illness-would-just-replace/
LSE study identifies remote work as having a negative impact on social cohesion, suggesting that remote work is increasingly forcing a divide between haves and have nots in large European cities.
One of the most memorable catch phrases to come out of England in the early sixties was “I’m alright Jack,” shorthand for a sense of entitlement that would later come to be associated with selfish attitudes linked to the much-maligned baby boom generation. A London School of Economics study of large European metros points out that while concert goers, sports fans and foodies have returned to the streets, white collar workers are still choosing to avoid the office. Describing office workers as ‘metropolitan elites,’ the LSE study cautions that remote work could have a disproportionate impact on smaller, poorer regions where head offices and large companies are less likely to be located.
https://fortune.com/2022/12/06/how-many-people-remote-work-from-home-lse-study-italy-social-class-metropolitan-elite/amp/
Code Red in the Office – Australia taking the impact of remote and isolated work on the mental health of office workers seriously.
Several Australian states including New South Wales (home to the country’s largest concentration of office workers, are proposing to introduce new workplace health and safety legislation that “significantly increases the duty of employers to protect the mental health of employees.” Citing a “code” developed by Safe Work Australia, Helen Trinca (managing editor of The Australian, that country’s national newspaper) offers numerous examples of working conditions that could create undue stress. These include companies with young workforces working remotely where there are “young men who literally haven’t left their rooms or houses for a couple of months.” Another example cited is when a majority of a company’s workers have come back to the office, allowing a small percentage to continue working at home. “All of a sudden, the people going into work are establishing closer bonds than those interacting with a camera,” reported an HR consultant. Those working remotely are at risk of exclusion, she reports. The Code requires companies to manage ‘psychological hazards.’ It is meant to be “a living system…that considers workers throughout their employment/engagement.”
https://www.theaustralian.com.au/subscribe/news/1/sourceCode=TAWEB_WRE170_a_GGL&dest=https%3A%2F%2Fwww.theaustralian.com.au%2Fbusiness%2Fthe-deal-magazine%2Fworking-from-home-now-a-psychological-safety-risk%2Fnews-story%2F6c9b27c4030d17adc85fe53cb12fdc2c&memtype=anonymous&mode=premium&v21=dynamic-groupa-test-noscore&V21spcbehaviour=append
Hub and Spoke locations for large employers benefiting Brooklyn as workers seek to avoid Manhattan. Could a similar movement take place in the GTA?
Although the dynamics and decision-making about commercial real estate in New York are very different than in the GTA, one wonders if some of the office clusters around the GTA could take on extra significance for multi-location employers…although a key difference between the GTA and New York is that Brooklyn can offer rail-based transit.
https://www.bisnow.com/new-york/news/office/hybrid-work-craze-is-good-news-for-the-under-officed-brooklyn-market-116748?utm_source=outbound_pub_5&utm_campaign=outbound_issue_63225&utm_content=outbound_link_1&utm_medium=email
Chicago transit use at 60% of pre-pandemic levels – transit authority ‘heading over financial cliff’ when special federal funding runs out in 2026
Chicago’s transit authority typically has to earn 50% of its revenue from fares but this requirement was waived during COVID. But with ridership levels stuck in the basement, the authority is sounding the alarm. The current funding model is not sustainable, say its leaders. Here in the GTA, where there is a patchwork of funding arrangements, the TTC is most vulnerable to lower than hoped for farebox revenue. Is it time for a whole of region approach? SRRA has put forward implementable options for the GTA. Seeing competitors like Chicago suffer is a reminder that powerful economic engines need to be treated with care.
https://www.smartcitiesdive.com/news/chicago-transit-users-fare-hikes-service-cuts-without-new-funding/638391/
And now, as Monty Python used to say, something completely different
The high cost of free parking version 2.0? Planned legislation in France could be a game changer for helping to create an affordable source of electricity to power e-vehicles.
Seems like a simple solution but is it too good to be true? One could imagine a similar requirement for hundreds of parking lots in the GTA…
https://www.cnbc.com/2022/12/03/parking-lots-becoming-as-important-as-cars-in-climate-change-efforts.html
Stay safe,
Your SRRA Team
“The Occupancy Index is supported by the City of Toronto, Financial District BIA, Bloor-Yorkville BIA, The Waterfront BIA, Downtown Yonge BIA, St Lawrence Market BIA and Toronto Entertainment District 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],”
