It is the subject of endless speculation and discussion – when will people go back to work. But a new gauge of downtown foot traffic shows that Toronto lags behind most North American cities when it comes to returning to the office.
Of the six Canadian cities, only Ottawa lags behind Toronto in terms of commercial traffic. This is according to a new vitality index, developed by the commercial real estate company Avison Young. It shows that foot traffic in Toronto is still on average 85.8 percent lower than it was before the pandemic. Ottawa is down 89.6 percent over the same period.
Toronto’s office activity ranks 18th out of 23 North American cities. Only Silicon Valley, East Bay/Oakland, California and Miami, as well as Ottawa, had low office attendance last week.
Three Canadian cities – Calgary, Edmonton and Vancouver – were among the five centers with the highest office occupancy. Boston was earlier, about 55 percent below pre-pandemic levels. Austin, Tex., rounds out the top five.
Avison Young officials would not speculate about when Torontonian offices would return. New York-based executive director Craig Leibovitz said how cities are faring depends on government pandemic regulations, vaccination rates and the city’s industrial base.
When we go back it will be a whole new world of hybrid work, said Sheila Botting, president of the company’s professional services for America. She said there would be a transition period for downtown businesses and buildings.
“Given that we are behind the US and we are not at 50 percent (office occupancy), I think it’s going to be a slow move,” she said.
But Botting, which is based in Toronto, said that, “Downtown Toronto and downtown any city – buzz, action, vibrancy will return.”
Toronto office vacancies increased to a record 7.3 percent in the second quarter of this year. This compared to 2.5 percent in the second quarter of 2020, according to Avison Young. But available space for Sublet, 32 percent of the city’s available office space, fell in the second quarter of this year for the first time in six quarters.
“The sublease space in the market has gone up because big corporate tenants are saying, ‘We don’t need any more space. There’s none.’ The space will always be needed. Those places will be reused. It’s just the purpose of those places will be different,” Boating said.
She said Toronto is well positioned to season the transition as many of its downtown towers are owned by pension funds that could face change.
“Challenges come with small properties, small businesses and that is why there is so much attention by the commercial real estate industry and by different levels of government to being able to subsidize rents, to be able to help with various employment issues. given,” she said.
Leibovitz said the index is designed to provide transparency around the question of returning to work, which has broader economic and office implications.
Based on anonymized cellphone data at nearly 15 major downtown locations, the index compares foot traffic in Canada to the week of March 2, 2020, just before the first pandemic shutdown. Labor Day 2019 is the reference point for American cities.
The index also measures how many individual industries are bringing employees back into the office. It shows that of the eight industries in Toronto, telecoms are seeing the highest rate of return to the office – down about 67 percent since the pandemic – after consultation (69.2 percent). The hospitality and tourism, insurance and technology industries are at the bottom of the ranking.
of toronto Strategic Regional Research Alliance (SRRA), which also measures downtown office occupancy, showed that offices were occupied by 9 percent in the week of September 1, up one percentage point from the week of August 15.
Since May 1, 2020, SRRA’s occupancy index showed that the week of September 15 last year had the highest office occupancy of 10 per cent.