By Darren Fleming, MBA
CEO of Real Strategy Advisors
With the increased scheduling of vaccinations, there’s excitement building around getting back to something resembling normal.
An increased ability to socialize, eat out, meet up for a drink, and even head back into the office to see each other are all activities lots of us can’t wait to do. Now that that’s the case, more and more companies are roadmapping their return-to-the-office strategies and are thinking about their leasing needs.
Many companies are even considering potential actions in advance of their lease expiry so as to take advantage of historically soft office rents, and juicy landlord incentives. Some are looking at early lease renewals to finance a renovation of their space while everyone is still primarily working from home. We’re also starting to get a sense of how much space is set to come back onto the market; and it’s a lot!
What this all means is that while we’re anticipating a lot of activity, as tenants renovate and rightsize their space, Real Strategy is still predicting an overall drop in net demand for office space as companies leverage remote work and hybrid models versus traditional assigned seating. With that said, we’re already seeing signs of historically aggressive incentives to attract both short- and long-term tenants.
The other shoe waiting to drop is the federal government’s return-to-work strategy. Stéphan Déry, the assistant deputy minister of real property services at Public Services and Procurement Canada, has said the footprint of the public service will decrease from 30 per cent to 50 per cent over the next 20 to 30 years as public servants move to a permanent hybrid model. It is as of yet unclear what this will mean for the National Capital Region and the 60 million square feet they own and lease.
As the region’s largest employer and consumer of office space, even a modest decrease in how much time a public servant will spend in a physical office (if at all) will have an enormous impact on Ottawa’s entire commercial real estate market in terms of overall vacancy. While it’s unlikely we’ll hear about specific timing of any downsizing of space (or jobs) during a minority government, a decision will have to be made as it becomes safer to send employees back to work as vaccination rates rise.
The two major themes we’re covering in this issue are culture and technology as they pertain to the post-COVID office. We’re joined by Chantal Boyer-Casey, principal and interior designer, and Tzoofit Hammer, principal and senior designer, of 4té Inc. for another entry in our construction and layout series. We also continue our exploration of hybrid work with insight from Derrick Hanson, the president and co-founder of The Attain Group. We also have our commercial real estate market report that summarizes the second quarter of 2021.
We’re excited to help shepherd public and private organizations through this next office space transition with a market that continues to be beyond tenant-friendly. Whether you’re starting to look at your options, have secured space but are trying to figure out how to manage it, or are figuring out your strategy all while fostering an innovative company culture, remember that you deserve amazing space!
Darren Fleming has been an industry leader in the commercial real estate sector for over 20 years providing expertise in the areas of workplace strategy and commercial real estate brokerage. Darren has worked with some of Ottawa’s most active commercial design builders and major commercial real estate brokerages. With exceptional consulting and business strategy skills, he is an experienced leader and provides C-Suite level advice to his clients.
