With many offices and storefronts operating at reduced capacity – or outright closed – for much of the past year, some local companies say they plan to shrink their commercial real estate footprint over the next five years.
But, nearly the same proportion plan to grow their physical footprint.
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.
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The results of Welch LLP Ottawa Business Growth Survey suggest a significant shakeup may be on the horizon for the city’s commercial real estate sector, with half of survey respondents saying they expect to either increase or decrease their office footprint over the next five years.
“A strong and vibrant commercial real estate market is very beneficial to the local economy – it supports many jobs via direct and indirect employment in the sector,” says Jim McConnery, partner at Welch LLP. “Ideally we continue to successfully mitigate the COVID-19 risk such that more employers and employees are comfortable with a return to a more traditional work environment – which translates to stable and increasing demand for commercial space.”
However, as employees increasingly consider a hybrid work model, employers are looking for more flexibility in their leases to try and avoid paying for space they don’t need, says Timothy Thomas, a partner and real estate lawyer at Perley-Robertson, Hill & McDougall.
“Business owners are asking for the ability to give up space after a certain period of time, or for a shorter lease altogether so as not to commit to a space they won’t use,” he says. “We may even see the price of office space decrease over time if more businesses explore other options.”
The challenge with shorter leases is that businesses won’t be incentivized to fit up the space in a way that works for them if they aren’t planning on staying long term, which could affect the atmosphere in the office, Thomas adds.
“Increasingly, businesses are going to be looking for move-in ready space with amenities that get employees excited about coming to work,” he says. “They also want to work with reasonable, caring landlords that will take their needs into consideration – especially during times of economic hardship.”
Read the full 2021 Welch LLP Ottawa Business Growth Survey report by clicking on the cover below:
