When the COVID-19 pandemic began and offices transitioned to work-from-home arrangements, many people speculated that remote work could become the norm and replace the physical office forever. But a new survey suggests the office is not dead, as employers appear to be growing less enthusiastic about remote work as the pandemic drags on.
According to a report by commercial real estate firm Colliers, employers surveyed in June estimated that working from home had caused employee productivity to drop by 22.6 per cent. In a November survey, this number had increased to 23.4 per cent.
John Duda, president of real estate management services at Colliers Canada, said growing concerns about employee productivity, the potential erosion of workplace culture and a general feeling of “Zoom fatigue” means employers are now less likely to say they will need less physical office space going forward.
For example, in June, 46 per cent of respondents to the Colliers survey expressed a desire to reduce their office space, but this number dropped to 37 per cent in the November survey. Compared to June, tenants were 20 per cent less likely to indicate they need less space, and 30 per cent more likely to want more or the same amount of space.
“At the beginning, there was almost a bit of a euphoria. It was, ‘we can do this, we can work from home, I’m going to get rid of some of my space,’ ” Duda said. “And now that this is setting in and people are seeing the lack of productivity . . . they’re seeing that people are fatigued by the whole thing, and they’re saying ‘wait a minute, I can’t function like this as a business.’ ”
The Colliers report also reveals that 54 per cent of businesses across the country expect 100 per cent of their employees to return to the office after a vaccine is available, which Duda said indicates that people value the role of the workplace and want to return when it’s safe to do so. Regional and small businesses are more likely than national and international businesses to indicate that 100 per cent of their employees will return to the office.
“Things are changing very quickly, and it’s possible attitudes will shift again once the vaccine is in place,” Duda said. “What we’re seeing on the leasing side is, very few people are making long-term decisions (about real estate needs) right now.”
Mary Moran, president and CEO of Calgary Economic Development, said she has not heard of any significant Calgary companies that have made the decision to make remote work arrangements permanent. She said different companies will gauge the success or failure of these past nine months of work-from-home differently, but added the general consensus is that productivity goes down when employees work from home any more than two days a week.
“I do worry about the mental-health implications of it, too,” Moran said. “As convenient as it is to roll out of bed and head to your home office, the monotony of it is not healthy. Limited social interaction during the day is not healthy.”
Prior to the pandemic, Calgary was struggling with sky-high downtown office tower vacancy, due to ongoing weakened oil prices and rounds of layoffs in the energy sector. That downtown vacancy rate remains elevated, at 27.8 per cent, Moran said.
While some Calgary companies may opt for more flexible work arrangements or remote work options even after a vaccine is available, Moran said, it is unlikely that these changes will result in any significant increase in the city’s downtown vacancy rate. However, that doesn’t mean that problematic vacancy rate is coming down anytime soon.
“The more acute problem that I’m worried about is the consolidation in the energy sector, which is going to have a negative impact. The Husky-Cenovus (merger) was a big surprise to a lot of people, but we know there’s going to be a lot more of that. And I think there’s going to be shedding of office space that way,” Moran said. “I’m more worried about that in the short-term than about people deciding that everyone’s going to work from home.”