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Toronto ranks 18th out of 23 North American cities in returning to the office

Toronto ranks 18th out of 23 North American cities in returning to the office

It is the subject of endless speculation and discussion – when will people go to work again. But a new measurement of downtown foot traffic shows that Toronto follows most North American cities when it comes to returning to the office.

Among six Canadian cities, only Ottawa lags behind Toronto in terms of business traffic in the center. That’s according to a new Vitality Index, developed by commercial real estate firm Avison Young. It shows that foot traffic in Toronto is still 85.8 percent lower on average than it was before the pandemic. Ottawa has fallen 89.6 percent in the same period.

Toronto’s office activity ranked 18th among 23 North American cities. Only Silicon Valley, East Bay / Oakland, California and Miami, as well as Ottawa, had lower office attendance last week.

Three Canadian cities – Calgary, Edmonton and Vancouver – were among the five centers showing the highest office occupancy. Boston, which was about 55 percent lower than the pre-pandemic level, was first. Austin, Tex., Rounded the top five.

Avison Young officials would not speculate on when the Torontonians would return to office. How cities fare depends on government pandemic regulations, vaccination rates, and a city’s industrial base, New York CEO Craig Leibowitz said.

When we go back, it will be a new world of hybrid work, said Sheila Botting, the company’s president of professional services in America. She said there will be a transition period for shops and buildings in the center.

“Given that we are behind the United States and we are not at 50 percent (occupancy in the office), I think it will be a slow walk forward,” she said.

But Botting, based in Toronto, added that “Downtown Toronto and the center of every city – the hum, the action, the life force returns.”

Offices in Toronto rose to a record 7.3 percent in the second quarter of the year. That’s compared to 2.5 percent in the second quarter of 2020, according to Avison Young. But vacancy for sublease, 32 percent of the city’s vacant office space, fell in the second quarter of the year for the first time in six quarters.

“Rental space on the market has increased because large commercial tenants say: ‘We do not need the space anymore. No one is with. There will always be a need for space. These spaces will be used again. It’s just the purpose of these spaces will be different, ā€¯Botting said.

She said Toronto is well equipped to cope with the transition because many of the city’s towers are owned by pension funds that can withstand the change.

“The challenges come with the smaller properties, the smaller businesses, which is why there has been so much attention from the commercial real estate industry and the different levels of government to be able to subsidize rents, to be able to help with various employment issues,” she said.

The index is designed to provide transparency around the issue of returning to work, which has broad financial and office implications, Leibowitz said.

Based on anonymized cell phone data on about 15 key 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 much the individual industries draw employees back to the office. It shows that among eight industries in Toronto, telecoms see the highest return to the office – about 67 percent since the pandemic – followed by consulting (69.2 percent). Hospitality and tourism, insurance and the technology industry remain at the bottom of the rankings.

Toronto’s Strategic Regional Research Alliance (SRRA), which also measures downtown office occupancy, showed that offices were 9 percent occupied the week of Sept. 1, a percentage point up from the week of Aug. 15.

Since May 1, 2020, SRRA’s occupancy index showed that the highest office occupancy of 10 percent was the week of September 15 last year.

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