The Covid-19 pandemic has had a tremendous impact on the commercial real estate industry. Central Business Districts throughout Atlantic Canada (and beyond) have experienced the greatest impact as the market shifts away from traditional brick-and-mortar office space. Many large employers anchoring multi-story office buildings have transitioned to a remote workforce to satisfy public health guidelines, while also providing their staff with more flexible working arrangements. Vibrant, bustling downtowns are now a shell of what they once were – your morning pitstop is now closing its doors and is shadowed by dark buildings and empty parking garages, while office towers are being considered for possible sale, renovation, or conversion to multi-residential purposes.
With a reduction in office occupancy, downtown districts have experienced a significant decrease in traffic. During December 2020 our in-house regional market survey found that the majority of urban centers throughout the Maritime provinces have experienced increasing vacancy rates. Halifax was the only market to see a slight decrease in the rate (of 1.39 percentage points). Downtown St. John’s on the other hand recorded the largest vacancy rate at a whopping 37.46%, substantially higher than that of the greater St. John’s area as a whole, and up 10.93 percentage points (PP) from the prior year. Moncton office vacancy rates increased 8.56(PP) from the prior year while Saint John and Fredericton followed with growth rates of 4.07(PP) and 3.83(PP) respectively.
On a macro level, Statistics Canada report that the number of firms with 10% or more of their workforce working remotely doubled between February and May 2020. This trend may not be over any time soon, as one in five companies reportedly expect 10% or more of their staff to continue working from home post-pandemic. Canada did experience a decrease in remote working after the first wave of COVID-19, however since October 2020 remote working has increased and in December was sitting at 28.6% according to Statistics Canada.
Although the pandemic has brought a lot of doom and gloom, it has also created new opportunities and broadened perspectives. Our Lasercad® team have had the pleasure of helping our clients pivot and re-focus; assisting them in mapping out socially distanced office layouts in order to “future-proof” spaces, while also promoting continued in-person workflow amongst staff. We have provided landlords and building owners with accurate measurements and floor layouts to aid in managing and renovating their properties.
The long-term effects of the pandemic on local commercial real estate remain to be seen, however preparing yourself and your property for various outcomes is a great start. Having an electronic CAD inventory of your space allows the flexibility to run a variety of scenarios and can be a helpful tool while working with tenants, contractors and buyers. If you would like to hear more about our recent projects please don’t hesitate to reach out. Our Lasercad® team would be happy to discuss your concerns and requirements as you try to navigate these uncertain times.
Mark Smith is a consultant in our Valuation Division and is heavily involved in many of our Lasercad® projects. For more information about our range of Lasercad® services, feel free to contact Mark at (902) 429-1811 or firstname.lastname@example.org.