In the early days of the pandemic, many opinions in the business world gravitated towards two extremes: either we would be working remotely at home forever, or, that it was essential to get workers back to the office as soon as possible for productivity’s sake.
Nearly two years into this experience, we're still experimenting and learning — and new data is showing us that we're increasingly moving towards a more reasonable middle ground.
We recently completed a survey that drilled into the details, experiences and expectations of businesses in the hybrid work era. The survey included a sample of tenants out of Colliers’ 31-million-square-foot national office portfolio based on factors like geography, business size, and industry. The survey contains responses from 472 companies, with a 95% confidence level.
We found that about 51% of companies currently have their workers in the office in some capacity. By early 2022, 85% of the companies polled expect to have workers back in the office — at least part-time. Depending on an employee’s role, the findings suggest that most workers will be back in the office between 1.5 and three days a week.
As many of these companies prepare to welcome back their employees, it's crucial for building managers and business operators to think about the work environment beyond the constraints of the building itself. To fully and coherently embrace a hybrid model, we must now consider how the neighbourhood, building and offices within it integrate into the online and offline employee experiences in ways that improve wellness, convenience, comfort and serve a purpose. The bottom line is this is still a great experiment and we’re continuing to explore what the future holds.
Office workers want clear health protocols and flexibility
One of the key findings of the survey was that transparent health and wellness protocols are the most important driver to tenants returning to the office. For instance, certifications for buildings or wellness-oriented operations and programming like Fitwel are becoming increasingly advisable initiatives for building owners and managers.
People are more sensitive and aware of air quality, energy usage and waste. Employees are coming back to work with more education on these matters, deeper concern and greater expectations — and our buildings and building managers need to adjust to provide specifics and context around what our impacts are.
The data shows that more and more companies have moved away from fully-in office and fully remote approaches, and towards a middle ground of hybrid work. Despite the many conversations around fully remote work earlier in the pandemic, only 1% of surveyed office tenants indicated they planned to go fully remote. The survey found that 66% of companies now expect to implement a hybrid working program (that's up from 58%, according to an earlier survey conducted in May of 2021).
Just over half of respondents said they would not dedicate desk space to employees who aren’t in the office full-time. This will increase office tenants’ need for flexibility in general and could require changes or strategies to accommodate a fluid workforce and different types of work on any given day.
We anticipate this to lead to greater demand for flexible and multi-use office space and building amenities, and the use of technology to facilitate more of an “on-demand” experience for space. Reflecting this sentiment, 26% of surveyed tenants indicated they would consider flexible office space in addition to their core leases as part of their future leasing strategies.
Parking is another interesting focus. Notably, for downtown office buildings, the availability and affordability of parking was identified as the second-most important driver for return to office by a large proportion of respondents, especially when compared to non-core office locations.
When thinking about an employee experience that starts from their homes, many workers may not yet feel comfortable commuting downtown in crowded trains and buses to get to work. It will be important for companies and building operators to make it easier for people to find parking, pay for it, and use it in a way that's more efficient and flexible than ever before — at least for now.
Data points to overall office market softening
We also need to measure the impact of this experiment on the Canadian office inventory itself. Our survey found that organizations returning under a hybrid model of work will need about 7% less space per employee.
Overall, the shift to hybrid work as an isolated variable indicates roughly a 5% increase in office vacancy nationally from current levels, by 2024. At the same time, flexible office space such as Regus, WeWork or other coworking models and short-term leases are anticipated to make up approximately 7% of future tenant space needs.
There will be more office space to go around. In the context of our hottest office markets like Vancouver and Toronto, that's not necessarily a bad thing.
For instance, Vancouver has been one of the tightest office markets in North America over the past decade and even though the pandemic has seen office vacancy climb to 7.4%, the market is already showing signs of resurgence. Having more breathing room for expanding companies or new companies to secure office space could be a welcome shift in many Canadian office markets over the next couple of years.
We’re finding our ‘middle ground’
At the beginning of the pandemic, there was a lot of noise and opinions landing on either end of the spectrum around approaches to the office. Many thought we would all be working fully remote for the rest of our lives, while others believed that companies would never tolerate having staff work from home.
That noise is starting to settle down, and we're moving towards the middle of the spectrum with hybrid work taking hold. It’s crucial for building operators and business leaders to be prepared for this next phase of the experiment.
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