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The uncertain future of the traditional office

Updated: May 30, 2023

With the shift to exclusively at-home telework – or even home/traditional office hybrid work – the commercial real estate sector took a hit during the pandemic. While employees adapted their home spaces to double as workspaces and homeschool, commercial vacancies in urban centres across Canada were on the rise.

Now that concerns over the pandemic have settled, many employers are calling their teams back to the office, and the work environment we used to know is unlikely to look the same as it did before. That has led numerous companies to adopt telework policies and embrace virtual meetings as the new normal.

To remain competitive and retain talent, employers recognize that they need to offer flexibility – but what this flexibility means is variable depending on the organization and their employee’s needs.

The Future is here and there

The Southern Alberta Institute of Technology (SAIT) and RFS Energy set out to research the impacts of telework on the Alberta real estate industry, with funding from the Alberta Real Estate Foundation (AREF). What we have learned through our research is a trend towards a hybrid work environment where employees have the ability to work from home anywhere between one and four days per week.

As a result, commercial real estate is unlikely to bounce back to a pre-pandemic scenario of full time in the office. The future for many will be a hybrid of work from home and work away from home.

The trend is that demand for commercial office space is lower today than it was pre-pandemic and is likely to remain low; office vacancies are expected to rise by 5 percent by 2024. From a 2022 survey of major Canadian employers, the consulting firm Colliers found that on average 10 percent less space is now needed per employee than what was reported in early 2020.

Some employers are viewing the growing prevalence of employees working remotely, whether part time or full time, as an opportunity to downsize their assets and reduce their operating costs. (As a result, some landlords are offering lower rental rates and more flexible leasing terms to attract or retain tenants.) Affordable housing advocates in turn argue that in cities with acute housing crunches, unused offices should be turned into affordable housing units.

New thinking, new opportunities

It isn’t all bad news for commercial real estate. Vacancy rates in urban office towers have spurred some building owners and renters to rethink how commercial space is used; they are seeing opportunities to transform former traditional offices into multi-residential spaces, distribution centres, labs or co-working spaces. Flexible workspaces – such as co-working spaces or short term leases – are likely to make up an increasing percentage of future office space needs.

However, the bottom line is that office space is not going extinct – it's still a mainstay for business, notes the Colliers report, “so long as workers feel the work environment gives more than it takes. To fully and coherently embrace a hybrid model, we must now consider how the neighbourhood, building and offices within it integrate into the online and offline employee experiences in ways that improve wellness, convenience, comfort and serve a purpose.”

But what will get commercial clients to this future office ecosystem? Our research points to flexibility and adaptability as attitudes worth embracing in this new era of hybrid workers. Employers and employees alike are evaluating and redefining what they need out of an office space. As a participant in this research project’s focus group put it, “uncertainty may be the new reality.”

Many of the same comforts that people are experiencing while working at home cross over with what they want to see at the office. Employees want spaces conducive to their new workstyles, from quiet zones and areas to keep your head down and focus, to spaces designed for collaboration, creativity, and human connection.

Flex spaces have been on the rise since before the pandemic, and offer a dynamic and adaptable environment for businesses. They allow organizations to adjust their space requirements according to their employees’ needs. The demand for flex spaces has only increased with the rise of telework. Commercial real estate owners are recognizing the value of offering flexible workspaces and are using them to attract tenants and adapt to changing market conditions. This shift towards flexible office spaces is likely to continue as businesses seek more agile and cost-effective solutions to meet their operational needs.

Looking outside the office building, employees also want to be close to amenities that they can use outside of working hours like gyms, childcare facilities, and interesting cafes or restaurants. If they must leave their homes to come into the office and contend with traffic and parking, it needs to be worth their while.

As another focus group participant said, ‘space’ and how we define it has expanded. “It’s not just the office… it’s the building, and the block on the way to the building.”

It will be beneficial for real estate professionals – including developers, designers and builders – to pay careful attention to these conversations so they can effectively help clients carry out their visions for more vibrant, collaborative and functional hybrid office environments.

Keeping in the know

Check out our blog series Home is Where the Work Is? based on our research on telework in Alberta. Through these blog posts, we will cover topics such as:

  • Understanding how remote work is changing the real estate industry

  • How telework led people to move from the downtown core to suburban and rural areas

  • Green tips for working-from-home

  • How telework has changed how we design and use spaces

Find all our resources – and all our blog posts in this series – at Presented by the Southern Alberta Institute of Technology and RFS Consulting, and funded by the Alberta Real Estate Foundation.


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