Employers leveraging on weakening economy to force workers back to the office, Avison Young CEO says

With the economy weakening and jobs becoming harder to get, employers now have the upper hand in their efforts to bring workers back to the office, says the head of one of Canada’s largest commercial real estate services firms.

 

While office occupancy levels are still below where they were prior to the pandemic, employers are becoming more forceful about requiring staff to work in-person, said Mark Rose, chief executive of Avison Young, which brokers leases, values commercial real estate and provides research, among other services.

 

“It’s more of an employer’s market,” Mr. Rose said in a recent interview.

 

Large employers such as Amazon.com Inc. and the federal government have increased the number of days workers must be in the office. Amazon is requiring its office workers in Canada to show up in-person five days a week starting in January.

Ottawa mandated federal civil servants to be back in the office a minimum of three days a week starting in September. Insurer Canada Life increased the number of required in-person days to three from two in the fall, while Telus Corp. has told its call-centre staff that they have to work in-person three days a week.

 

Mr. Rose said he is in constant communication with employers such as banks and other financial-services firms, whose executives have told him that they want their employees back in-person. And on the flip side, Mr. Rose also believes workers need to be visible in the office to advance their careers.

 

“I 100 per cent believe that people missed out on promotions because they weren’t seen,” Mr. Rose said. “People’s careers, people’s social activities, people’s knowledge base all rely upon being seen,” he said.

 

Statistics show more people are coming back to the office. The average occupancy volume in downtown Toronto’s office towers was at 72 per cent of prepandemic levels in early November, according to data from consulting firm Strategic Regional Research Alliance. Wednesdays were the peak day, with occupancy at 84 per cent of prepandemic levels. And the slowest day continued to be Friday, at 43 per cent.

 

November’s occupancy rates were the highest since the pandemic upended office work and employees started working from home en masse. By comparison, occupancy levels averaged 36 per cent in November, 2022, and just 16 per cent in the same month in 2021.

 

Toronto has been one of the slowest major business districts in Canada to recover. Some have blamed the city’s long-running stay-at-home pandemic mandates, which helped cement employees’ remote work habits.

 

Mr. Rose said employers need to be even more forceful in getting their staff back to the office. He called on major employers such as local governments and large financial-services firms to increase requirements for office attendance. He said some of the most reluctant to return are senior employees who are just below the executive rank.

 

“What we still have is the layer below the C-suite of senior people. They still believe that they earned the right during their careers to choose not to have a commute,” Mr. Rose said.

 

Even though more employers have been cracking down on remote work, the office vacancy rate is still climbing. Downtown Toronto’s rate was 15.7 per cent in the third quarter, the highest level since before the pandemic.

More than a dozen new office skyscrapers have opened over the past four years. That has added reams of new space to the market as employees shifted to remote work. There is now a total of 82.7 million square feet of office space in downtown Toronto, compared with 74 million square feet in 2019, according to Avison data.

 

The new office towers were planned before the pandemic, when downtown Toronto had an office vacancy rate well below 5 per cent and tech companies and other businesses were desperately looking to have a presence in the core.

 

The new towers include the 47-storey TD Terrace and the CIBC Square complex, which when completed will have two large skyscrapers.

 

Avison Young has operations in 20 countries including the United States, Britain, Germany and South Korea.

 

 

 

This article was first reported by The Globe and Mail