Over the past year, the world has changed in many ways – from the need to work remotely to employees asking for more from their employers. Many have asked: is the traditional office dead? Thankfully, our physical office is here to stay. But how will it evolve moving forward?
The rapid shift to remote working has helped raise Canada’s office vacancy rate during the COVID-19 pandemic. According to a February report from CBRE, the national vacancy rate for offices is up by 3.1% since the start of the pandemic. This has sparked questions about the long-term outlook for commercial real estate and the impacts of a changing world of work on other asset classes in Canada, including housing.
Vancouver’s commercial real estate market, particularly its office segment, is well-positioned to capitalize on the economic recovery anticipated to take place during the second half of 2021, according to Avison Young.
As passed, the Act protects commercial tenants with tenancy agreements eligible for the Canada Emergency Commercial Rent Assistance (“CERCA”) program, but whose landlords have chosen not to participate.
Today, Finance Minister Bill Morneau announced that the Canada Emergency Commercial Rent Assistance (CECRA) will be extended by one month to help eligible small business pay rent for August. All provinces and territories continue to participate in this initiative, and collaborate with the federal government to provide rent supports to those small businesses most in need.
The COVID-19 pandemic has led to an increase in sublease office space in major Canadian cities in recent weeks, particularly Vancouver and Toronto.
Flexible offices spaces are projected to reach more than 6.1 million square feet by the end of the year, up about 300 per cent from 2014, according to a report by CBRE Canada. An additional 1.3 million square feet is on the way with the bulk in Toronto, Vancouver and Montreal.
For three years now, the share of profitable coworking spaces has remained at roughly the same level, with 43% of all coworking spaces generating a direct profit from their operation.
The national office vacancy rate tightened by 50 basis points quarter-over-quarter to 11.9 per cent over the period, helped by a growing suburban office market particularly in Calgary and Waterloo, Ont.
Both size and capacity are important data points to consider. In particular, knowing the average sizes of spaces reveals not only how big a space should be to remain competitive in that particular city or country’s coworking market, but also how much space a city or country has to offer new commercial developments.