Ottawa Business Growth Survey: Hybrid work may permanently reshape downtown Ottawa

OBGS
Editor's Note

The Welch LLP Ottawa Business Growth Survey is a comprehensive annual research project that explores what’s ahead for the city’s economy based on surveys with hundreds of business leaders. Read their insights and understand the factors shaping business confidence in Ottawa, in this exclusive report.

The prolonged work-from-home experiment, and questions about where employees will want to work, post-pandemic, is leaving many businesses unsure of their future office needs – as well as what the future of the city’s downtown core will look like.

“Welch as an organization continues to be cautious with our office planning, in light of uncertainty, with respect to the amount of space that we will need over the next few years,” says Jim McConnery, managing partner at Welch LLP. “We know that staff appreciate the enhanced work-life balance that comes from a hybrid model, but it is clear that a similar approach by other employers, including the federal government, is having a major impact on the downtown core.”

A reduced need for office space may also be the result of employers switching to hybrid models of work; 46 per cent of respondents say they expect to have such an arrangement with staff. 

“Partners and staff have adapted effectively to a hybrid work environment with a view that we would likely not return to our legacy operating model even if there were no longer COVID challenges,” adds McConnery. “A hybrid model has allowed us to add staff without expanding our office footprint based on the opportunity to implement a hoteling model for staff who do not work in the office on a full-time basis.”

At the same time, 77 per cent of respondents to the Welch LLP Ottawa Business Growth Survey say they expect their organization’s commercial real estate footprint to either stay the same or grow. 

“The return to work is interesting,” says Tim Thomas, a partner at Perley-Robertson, Hill & McDougall, who specializes in real estate law. Most days, Thomas says, he finds himself alone at the gym in his firm’s downtown high-rise. He anticipates that class A space will become more affordable for clients who might otherwise have viewed it as out of reach. By the same token, class B and C properties will see changes in use, possibly by being converted from commercial to residential.

This scenario is particularly true for the downtown, where the federal government’s need for office space will likely decrease as more civil servants opt for hybrid work arrangements.

“I don’t think the government is going to give up space altogether … but I think it’s definitely going to be reduced downtown and I think that there’s going to be a lot of interesting changes of use of some of these buildings,” comments Thomas.

“The thing about a lot of these older buildings is, they need updating anyway, so do you spend to upgrade for commercial tenants or do you bite the bullet and convert them to residential use?” 

Another ramification of hybrid work for federal civil servants is that more of those employees, who traditionally have lived and worked in the region, could be hired from outside Ottawa-Gatineau.

“If (the federal government is) going to have, let’s say, a 30-per-cent remote workforce, then they can be in Moncton or Calgary or wherever, but I still think there’ll be pressure for them to have a significant presence in Ottawa,” observes Thomas. “But, even a five-per-cent or 10-per-cent reduction could have an impact.”

Equally, Thomas adds, Ottawa residents could stay in the city and work for employers located outside of the region.

Sueling Ching, president and CEO of the Ottawa Board of Trade, is excited about reimagining the downtown. She says that the federal government as an employer has provided Ottawa with an “economic bubble” for many years, but now must be clear about its intentions for the downtown to preserve business confidence and show leadership in bringing employees back to the office.

“Our downtown core is an economic and cultural hub for our entire city in the nation’s capital, which is a beacon for the entire world,” she says, adding that the visitor economy is the “front door” for all other types of economic development.

“Is the downtown core important for every large city across Canada? One hundred per cent. Is it important to Ottawa? One thousand per cent.” 

Visit https://www.ottawabusinesssurveyreport.ca to download your copy of the report.