Urban planning experts told the sellout crowd of 260 at the Shaw Centre that downtown merchants can no longer rely on a steady flow of office employees to drive sales.
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Declaring that the era of workers commuting to downtown offices five days a week “has come and gone,” a panel of urban planning experts said Wednesday it’s time for business and government leaders to accept that hybrid work is here to stay and devise new ways of using empty office space to re-energize Ottawa’s core.
Stephen Willis, the leader of engineering firm Stantec’s national urban planning practice, told the sellout crowd of 260 who attended the City Building Summit at the Shaw Centre that downtown merchants can no longer rely on a steady flow of office employees to drive sales.
“Foot traffic three days a week is not enough to keep them in business,” he said.
Willis, who studies urban planning trends across the country, said cellphone data and other metrics suggest the volume of people on Canadian downtown streets on any given day is only about 50 per cent of what it was before the pandemic triggered a massive shift to remove work.
But Willis, who previously led the City of Ottawa’s planning, real estate and economic development department, said the migration away from the office actually began a couple of decades ago.
New office construction has been declining in Canada and the United States for years, he explained. Yet most major downtowns are still “too office-dependent,” he said, and civic leaders are only just beginning to think about how urban cores can be reshaped to adapt to a hybrid work world.
“The actual value of office buildings is declining across North America,” Willis said, pointing to cities such as Washington, D.C., that have lost hundreds of millions of dollars in commercial property tax revenue after office towers with rising vacancies were reassessed.
“What the pandemic did is it took a long-term trend line and put it on steroids.”
Willis and the other members of the panel – Canadian Urban Institute president and CEO Mary Rowe and Canada Lands Company chief executive Stéphan Déry – said downtowns are the lifeblood of the Canadian economy. Without pedestrian traffic flowing through their arteries, communities will soon atrophy and eventually die.
“The fate of the country hangs on how our cities do,” Rowe said. “That’s all there is to it. If we don’t invest in our cities, if we don’t find new strategies for our cities, the Canadian economy and the Canadian social fabric is not going to hold.”
One of the most talked-about options – converting old, tired office highrises into multi-residential housing complexes – is gaining traction in centres like Calgary that experienced economic turbulence even before the pandemic, the panellists noted.
Déry, who was previously in charge of the federal government’s 65-million-square-foot office portfolio, said conversions offer “the opportunity of a lifetime” to reinvigorate downtowns like Ottawa’s that are “9-5 most of the time.”
He told the audience that the Canada Lands Company – a self-funded Crown corporation that buys surplus federal government properties and redevelops them into housing and mixed-use communities – is bullish on the concept and believes conversions can be a catalyst for redevelopment in Ottawa’s core.
“I think that’s the only thing we can do,” Déry said. “Canada Lands is definitely willing to work with the federal government to take some of those buildings and bring them into the (housing) market to make (downtown) a vibrant place where people want to live and not only come to work.”
While several former office buildings in downtown Ottawa have been turned into residential projects, real estate experts say such conversions are easier said than done – in part due to the prohibitive cost of gutting offices and rebuilding them from scratch.
During the audience question period, local real estate executive Shawn Hamilton suggested that Canada Lands could sell some of the obsolete office properties it acquires to developers at discounted rates in exchange for controlled returns.
Hamilton said that would help “de-risk” the conversion process, making it more financially attractive for private real estate companies “so that you can really help kickstart development and contribute to affordable housing.”
Déry was non-committal, saying Canada Lands is “open to looking at other ways of doing things” while noting that the company is self-financed and must remain economically “viable.”
“The government doesn’t give us property,” he added. “They sell us property at market value and we have to redevelop it.”
For her part, Rowe urged the municipal planners and real estate developers in the crowd not to waste time devising grand strategies for long-term development.
Instead, she said, they need to get the ball rolling on conversions and other potential strategies for reusing office space as soon as possible.
“The city needs to find ways to make it easier to do unusual things,” Rowe said. “You need to embrace the chaos side of this and try to temper your expectation that it’s going to be predictable and planned out. Do not underestimate the opportunity to just build this back block by block by block.”
