Toronto expected to have way too much office space until 2040s
An increasing number of Toronto companies continue to adopt hybrid work models despite lockdowns fading into the past, meaning nine-to-fivers are spending less time in the office and spaces remain largely vacant.
While some workers are slowly transitioning from a completely remote work model to commuting to the office twice, maybe three times a week, a new report from NAIOP Greater Toronto shows that a significant oversupply of office space will remain until at least 2041.
The report, titled Office Needs and Policy Directions in the GTA, was prepared by Altus Group and details three hybrid work scenarios — anywhere from the two to four days that employees will spend on average in the office.
In all cases but the four-day scenario, the report found that there will be "millions of square feet of surplus office space until 2041" in Toronto.
Even in this scenario, only 15 million square feet of new space would be required, which is about half of the pace of demand seen before lockdowns.
Given the surplus of vacant office space, some advocates are beginning to call for greater housing opportunities in office-dense neighbourhoods, as well as more office-to-residential conversions.
"Given the current oversupply, projects in the development pipeline, and the weak projected demand for new office space, the report recommends that governments put policies in place to facilitate and incentivize the conversion of functionally obsolete office buildings," the report reads.
"As an association representing office building interests, it is unusual for us to recommend policies that would result in less office space," said NAIOP Greater Toronto President Christina Iacoucci.
"However, with a likely significant oversupply of office space lasting potentially for decades, governments need to respond to changing work patterns and economic priorities. Many global urban centers are already addressing this challenge."
Office-to-residential conversions are already taking place in Calgary, where a new city program (comprised of five projects) is set to eliminate over 500,000 square feet of empty office space to provide residential space for over 1,000 people.
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