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Toronto’s Office Space Dilemma: Surplus Supply Expected Until 2040s

Toronto's Office Space Dilemma: Surplus Supply Expected Until 2040s

Hybrid Work Models Leave Offices Vacant, Sparking Calls for Creative Solutions

Hybrid Work Models Leave Offices Vacant, Sparking Calls for Creative Solutions

Toronto’s office landscape is facing an unexpected challenge as more companies embrace hybrid work models, leaving office spaces largely vacant. Despite the easing of lockdown restrictions, nine-to-fivers are spending less time in the office, leading to a significant oversupply of office space that is expected to persist until at least the 2040s.

The Hybrid Work Shift: Office Spaces Remain Empty

As lockdowns become a thing of the past, many Toronto companies are opting for hybrid work models, allowing employees to work remotely for a significant portion of the week. According to a report from NAIOP Greater Toronto, even as workers gradually transition from full remote work to commuting to the office a few times a week, there will still be a surplus of office space in the city.

The Altus Group Report: Office Needs and Policy Directions in the GTA

The report, titled “Office Needs and Policy Directions in the GTA,” prepared by the Altus Group, explores three hybrid work scenarios. Regardless of whether employees spend two, three, or four days on average in the office, the report predicts a surplus of office space until at least 2041.

Millions of Square Feet of Surplus Space

Except for the four-day scenario, the report highlights that Toronto will have “millions of square feet of surplus office space until 2041.” Even in the four-day scenario, which represents the highest level of office utilization, only 15 million square feet of new space would be required, which is only half the pace of demand seen before the lockdowns.

Calls for Innovative Solutions

Given the surplus of vacant office space, advocates are suggesting creative solutions to address the situation. Some are calling for increased housing opportunities in office-dense neighborhoods and advocating for office-to-residential conversions.

Incentivizing Office Conversions

The report recommends that governments implement policies to facilitate and incentivize the conversion of functionally obsolete office buildings. This recommendation acknowledges the need to respond to changing work patterns and economic priorities. While unusual for an association representing office building interests, NAIOP Greater Toronto President Christina Iacoucci emphasizes the importance of adapting to the evolving landscape.

Following Calgary’s Lead

Calgary is already taking steps towards office-to-residential conversions. A new city program consisting of five projects aims to repurpose over 500,000 square feet of empty office space, providing residential opportunities for more than 1,000 people. This proactive approach is an example of how cities are addressing the challenge of surplus office space in a changing world.

As Toronto grapples with the surplus office space conundrum, innovative solutions are being explored. The shift towards hybrid work models has prompted a reassessment of the city’s office landscape, with calls for greater housing opportunities and office conversions gaining traction. Adapting to changing work patterns and economic priorities is crucial as Toronto charts its course towards a more dynamic future.

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