Business

Office Vacancy Canadian Rates Peak Amid Hybrid Work Trends

Irfan Ameer
Irfan Ameer
7 Min Read

Have you observed that there seem to be fewer people in office spaces than there used to be? Judging from the fact that office vacancy rates in Canada are growing, office work is coming to an end everywhere. 

Contents
Consequences of Hybrid WorkAre Companies Happy with Hybrid Work?What’s Next for Office Space?Office Spaces Are Changing

More companies are allowing employees to work from home one or two days a week so they do not need to purchase that much office space. But how did we arrive at this point, and what does this entail for the buildings of the future in Canada?

According to a new report recently released by Colliers Canada, the national office vacancy rate could reach 15% by the year 2024 Southern Service Area Connex. That’s quite a significant increase from merely 8% in the year 2020. 

So then, what is the reason behind the empty spaces in offices? Hybrid work is changing how businesses operate, including how they occupy their space, and many are reducing. Let’s look more in detail on why that is the case and what the office buildings could look like in Canada.

Consequences of Hybrid Work

Hybrid work has had tremendous effects on office spaces in Canada and other countries. Since more people are opting to work from home, companies are evaluating the need to have offices. This is more evident in cities such as Toronto and Vancouver where real estate is scarce. “What is the most efficient use of the office space we have?” Many firms will find themselves asking this question.

Others are maintaining their offices but are better utilizing them for different purposes. Instead of building desks in parallel lines, they are focusing on active collaborative work. This means space where employees will not only go to work individually but to hold meetings or work together. Other companies are reducing their office real estate, moving to smaller real estates that’s suitable for them.

Based on the findings from Colliers, the companies with the greatest tendency to retain office space will be those that require workers to report to work no less than 4 days a week. But very few companies believe they will come back to a complete work week of 5 out of 7 days. People are starting to adapt to a situation where some days of the week people will be at a workplace while the others will be working remotely.

Are Companies Happy with Hybrid Work?

So, how do businesses feel about hybrid work? According to a survey by Colliers, 86% of companies are satisfied with their current hybrid setup. That’s a big number, and it shows that many businesses are adjusting well to the changes.

But there’s still a bit of a gap between what management and employees want. Senior management often prefers to have workers in the office more. On the other hand, employees enjoy the flexibility of working from home. There’s also a difference in how workers feel about their office environment. Those who have private office space are more likely to come into the office. But people working in open-plan offices prefer staying at home, where they have more privacy.

Even with these challenges, most companies are finding ways to make hybrid work successful. And since most employees are happy with their current setup, it’s clear that hybrid work is here to stay.

What’s Next for Office Space?

Looking ahead, the future of office spaces in Canada is still taking shape. While vacancy rates are expected to peak in 2024, they might start to go down by 2025. That will depend on how the economy does. If businesses grow and expand, they could start filling up those empty offices again. But if the economy slows down, high vacancy rates might stick around for a while.

Flexible office spaces are likely to become more popular. As companies continue with hybrid work, they’ll need office setups that can adapt to their changing needs. This could mean more co-working spaces and shared offices.

At the same time, companies will need to find ways to get employees back into the office. Some businesses are redesigning their office spaces to make them more appealing. Others are offering perks like quiet work areas or better amenities to encourage staff to return. The key will be creating an environment where employees actually want to come back to work.

Office Spaces Are Changing

Canada’s office vacancy rates are climbing, and hybrid work is the main reason why. As companies embrace this new way of working, they need less office space. But that doesn’t mean the office is going away for good. Instead, businesses are rethinking how they use their spaces.

Whether it’s cutting down on space, redesigning the office, or offering flexible work options, companies are figuring out how to make this new work model fit. While vacancy rates may peak in 2024, we’re likely to see the office market find a new balance as businesses continue to adjust.

Are you planning for hybrid work in 2024? If your business is looking to adapt to the new work model, now is the time to think about your office needs. Whether you decide to reduce space or redesign it, make sure your office is ready for the future of work.

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