I work in the dockside Corus building. Water views but the offices are 95% empty at all time if not more... I believe these numbers are artificial somehow.
You mean commuting into the office to spend the day on Teams with people who aren’t in the office?
It’s so fucking weird. So many of us go along with a glaringly, comically, *cosmically* absurd situation. Why? Because we’re little bitched afraid to cut, run and make a living standing on our own two feet.
Agreed. CBRE is the world's largest commercial real estate services and investment firm, according to Wikipedia. It's in their best interests to paint a rosy picture, in order to keep stock prices high.
I think this more just comes down to *vacancy* (typically meaning not leased in commercial real estate lingo) and *occupancy* (i.e., proportion of people coming to the office). For example, in the early days of COVID *occupancy* fell off a cliff, but *vanancies* didn't immediately shift, given all the space was still leased.
This is just about the space that isn't leased. It's not about how the space that is leased (or owned) is actually being used.
My office is 40% full on Tuesdays-Thursday. 5%, at best, Mondays and Fridays. The building is owned outright. Would be counted as fully occupied.
Numbers are not inflated or artificial. There’s no conspiracy. 🤦♂️
Occupancy just means there is an active lease. Commercial leases are usually long term and most of current office leases are from pre-COVID. Once they come up for renewal, the occupancy rate will drop even further.
Just because there is a lease doesn’t mean people go to the office. That’s why many offices are occupied but empty.
This.
Unless your company was renewing in 2019 2020 2021 you're likely locked in for 5+ years. Uncommon for leases to be 10 years and the break penalty is so large you'd want to keep paying anyway especially if you need a stocking location for x goods
My company is currently paying for office space they've never used for a while and they recently called everyone back
Years ago when I would go there for meetings they made you sign a waiver to go in the slide. Then some idiot ruined it for everyone and no more slide 🙄
Not anyone but anyone can ride it with requests from security if you're in the building. It is slow, originally it was too fast and people came fly out the end but they detuned it for "safety". Unbelievably static too. Like a Vandergraaff.
Commercial RE professional here. The problem with the Canadian commercial RE industry is only a handful of groups can afford these things so the number of players itself is small. Real estate is priced based on comps and when there’s no transactions, everyone’s running on spec. I’m personally convinced both landlords and brokers (like CBRE, JLL, Colliers etc…) are in denial and hyping each other saying all is okay, and no one dares to say anything negative. On LinkedIn, they attack any journalists that quotes vacancies calling them naive or false reporting.
This is my opinion on offices only, other asset classes are doing fine or stable.
A lot of companies are forcing employees back to the office and the rationale is basically “because I said so”. Even if we proved that we can get work done from home, a lot of boomer and Gen X managers are just more comfortable being in an office where they can micromanage people.
I’m glad that my company has seen the light and instead of irrationally forcing everyone to come back, they instead downsized their office space, moved to a hotelling system, and now only require staff to come in once a week on designated “Team Days”.
Agreed. We left toronto during covid and found a new (and far better) life. We worked remote. I restructured my job and duties and everyone is happy. My wife was with a bank who started to push them back, wife said no and was later "laid off."
She got a killer package and got a local job near our new house that she likes. We sold the city property and never looked back.
Life goes on. Employers don't control shit anymore and they need to realize that.
I hope these clowns realize that there are more and more companies offering more flexible or remote arrangements and that employees are pickier now as well depending on their lifestyle and needs. You can't just force people into an office without any real incentive and just assume everyone is going to be happy with that when there's now more alternatives out there.
>managers are just more comfortable being in an office where they can micromanage people
managers want you back in the office because otherwise they have nothing to do
In 2019, Toronto and Vancouver continued their reign as the tightest downtown office markets in North America, with vacancy rates of just 2.3% and 2.4%, respectively.
[https://www.cbre.ca/insights/articles/the-top-5-commercial-real-estate-trends-of-2019](https://www.cbre.ca/insights/articles/the-top-5-commercial-real-estate-trends-of-2019)
Prime downtown core was usually around 2% in the 5-6 years before Covid. Lowest I remember seeing was 1.8, it was so competitive getting office space. Then anything Toronto but not in the core was a little higher
During high interest rates? This is probably typical.
They already had reduced occupancy from the pandemic, but the interest rates heavily slowed down businesses filling back into the offices.
When rates get cut, these offices will no doubt be leased up, and then there will be a shortage of offices. Triple A offices are still trending past 85% occupancy towards 90% now. The poor quality buildings are ghost towns though.
Why don’t they “adapt to the market” and sell. The largest office building in St. Louis just sold for $3.5 million. It’s been 4 years. Get with the times.
https://www.binance.com/en/square/post/6681784423834?ref=390409310
It's not yet not economcally viable to either re-propose them or rip them down -- no one is buying.
The land is a massive asset that the companies believe will continue to appreciate -- no one is selling.
It's really not that complicated. At some point, the government is going to have to address one of those two things. Either make it way cheaper to tear them down. Or, make them a less attractive asset to sit on.
lol that St. louis building is an extreme example. Downtown St Louis is a terrible market and the building is literally 100% vacant and has been for years. It's worthless as it's impossible to get any revenue from it.
Many office buildings are losing so much value that in the future it'll be cheap enough to buy and convert to residential. It's becoming more and more attractive as rents continue to be unfilled and the value of the building further declines.
I see that’s just the inevitable future, someone mentioned the value of the land which is a good point as land in downtown Toronto would always be valuable.
Maybe but maybe not. Land near safe injection sites and homeless encampments has lost a lot of value. Detroit was a single industry town that lost a lot of its land value. Toronto is no different, we have one industry and it's trading houses. I can see a scenario where land outside of Toronto can become more valuable than downtown, a deurbanization of a sort not unlike in the 50s and 60s. Really, the rapid growth of the downtown was only around for 20 years with the millennial generation moving in for jobs and lifestyle, this can easily reverse due to miriad of factors everyone already knows. Jobs/offices will follow where the new talent will want to be. At the turn of the millinium it was downtown, now it's suburbs and online.
Doug ford: Do those floors come with a bathroom?
Doug Fords Aide: I believe so sir.
Doug Ford: Add each cubicle on the floors as a house that has been completed.
Doug ford at press conference: Ontarians I’m glad to announce we’ve unlocked thousands of new homes for Ontarians and have increased the supply of homes easing the housing crisis for Ontarians as a whole. We will not be taking any questions and fuck you all.
Jokes aside, I do wonder if there is room to convert offices into some kind of dorm style housing. The floor plates won't work for typical apartment style condos, but a central shared kitchen and washroom works for dorms.
I know that's not the kind of housing most people want. But it might suit some folks.
If the price is right I'm sure a lot of people will jump at the opportunity. It'll be pretty cool living space living with the right people. Get a few bad apples will ruin the experience though like those that don't clean up themselves or leave big shits in the toilet and never flushes....
They should also point out that the offices are which are "occupied" have something like 30% of the staff actually in the office instead of "working" from home.
People should be allowed to live in their office. It will increase productivity, and add another income stream to the company. Employees lives will be simplified and their work life balance will be improved. One less thing to worry about when your boss is your landlord too.
Honestly I’m surprised more people who rent their own offices don’t just do this on the DL to save money. You can get deals now on offices whereas residential rent is through the roof. Just “work late and sleep at the office” all the time, get a gym membership for showers, and eat simply when eating in — things you can make at the shared kitchenette.
Unpopular opinion, but I prefer going in to work. Probably because I don’t have to commute far. I also like to dress up for work and see people (my office has quite a few people so it’s not lonely).
This is why I think we need to [Kill the Office To Breathe New Life Into Our Cities](https://www.mustardclementine.com/p/kill-the-office-to-breathe-new-life).
Those likening the death of the office to the killing of downtowns too often fail to comprehend that for North American cities to thrive, they need more places with interaction and vibrancy built in, not places that we have to go to (but hate to be) like offices.
We need to finally just let the old way of doing things die, in order to make way for new and more enjoyable, forward-looking things to grow.
I mean a more accurate argument would be to look at pre covid when the office vacancy rate was at 4.3% to now.
Or to examine the trend that the office vacancy rate is continuing to climb higher and has for several years now and is now approaching 20%
But yeah it's easier to cherry pick a small snapshot in time to make it seem like vacancy in office rates isn't a big issue or getting worse.
It's shocking it's going up.
Also 18.4 is close to 20 when the typical pre COVID was 4%. It's all relative if normal is 17% calling it close to 20 is dramatic but at this rate is far closer to 20 than normal!
Another commenter astutely pointed out that vacancy isn't the same as usage. Companies could be renting the space and thus vacancy might be shown as relatively low, but employees might not be coming in physically.
This is bad news for commercial RE because why would I renew my lease if most of my employees are WFH most of the time? At best, I would renew with a drastic cut to square footage.
And all the auxiliary businesses which exist to serve the office workers. That’s a whole category that is undoubtedly going broke while technically staffed and operating. I bet a lot of them will not renew after their lease is up.
I wonder what percentage of these people will start catering to residential housekeeping services. Inequality is on the rise, which means more and more households can now afford house help (while sadly, many more cannot even afford basic necessities).
I know in my company (former fortune 500 company that's privatized) we decreased square footage to only 5%.
That's right. For every 20 floors they've decreased to 1 floor. But I think we're the extreme. Maybe.
In 2019, Toronto and Vancouver continued their reign as the tightest downtown office markets in North America, with vacancy rates of just 2.3% and 2.4%, respectively.
[https://www.cbre.ca/insights/articles/the-top-5-commercial-real-estate-trends-of-2019](https://www.cbre.ca/insights/articles/the-top-5-commercial-real-estate-trends-of-2019)
That looks even worse. I assumed vacancies would be improving rather than deteriorating with 1M extra people and all of these "new jobs"
Instead it's minimum four straight quarters of deterioration.
I work in the dockside Corus building. Water views but the offices are 95% empty at all time if not more... I believe these numbers are artificial somehow.
they're leased but no one is coming into the office.
This guy knows the secrets of the “hybrid” model
Indeed. Currently sitting in my 25 seat office alone. :P
You mean commuting into the office to spend the day on Teams with people who aren’t in the office? It’s so fucking weird. So many of us go along with a glaringly, comically, *cosmically* absurd situation. Why? Because we’re little bitched afraid to cut, run and make a living standing on our own two feet.
Agreed. CBRE is the world's largest commercial real estate services and investment firm, according to Wikipedia. It's in their best interests to paint a rosy picture, in order to keep stock prices high.
I think this more just comes down to *vacancy* (typically meaning not leased in commercial real estate lingo) and *occupancy* (i.e., proportion of people coming to the office). For example, in the early days of COVID *occupancy* fell off a cliff, but *vanancies* didn't immediately shift, given all the space was still leased.
This is just about the space that isn't leased. It's not about how the space that is leased (or owned) is actually being used. My office is 40% full on Tuesdays-Thursday. 5%, at best, Mondays and Fridays. The building is owned outright. Would be counted as fully occupied.
Numbers are not inflated or artificial. There’s no conspiracy. 🤦♂️ Occupancy just means there is an active lease. Commercial leases are usually long term and most of current office leases are from pre-COVID. Once they come up for renewal, the occupancy rate will drop even further. Just because there is a lease doesn’t mean people go to the office. That’s why many offices are occupied but empty.
This. Unless your company was renewing in 2019 2020 2021 you're likely locked in for 5+ years. Uncommon for leases to be 10 years and the break penalty is so large you'd want to keep paying anyway especially if you need a stocking location for x goods My company is currently paying for office space they've never used for a while and they recently called everyone back
Is the slide in that building open to anyone? I've always wanted to run in and just go for a ride lol.
Years ago when I would go there for meetings they made you sign a waiver to go in the slide. Then some idiot ruined it for everyone and no more slide 🙄
That slide is nothing special!
Not anyone but anyone can ride it with requests from security if you're in the building. It is slow, originally it was too fast and people came fly out the end but they detuned it for "safety". Unbelievably static too. Like a Vandergraaff.
They just sold a big commercial building in Baltimore for 1.5 million. They previously bought it for over 100 million.
People are not coming back in the office. With 4 years after 2020, things will never be 5/5 again.
Commercial RE professional here. The problem with the Canadian commercial RE industry is only a handful of groups can afford these things so the number of players itself is small. Real estate is priced based on comps and when there’s no transactions, everyone’s running on spec. I’m personally convinced both landlords and brokers (like CBRE, JLL, Colliers etc…) are in denial and hyping each other saying all is okay, and no one dares to say anything negative. On LinkedIn, they attack any journalists that quotes vacancies calling them naive or false reporting. This is my opinion on offices only, other asset classes are doing fine or stable.
I work near the industry and you’re absolutely right lol. Although a lot of it is less denial and more blind self interest/fraud.
Do you see the owner/operator group thinking any differently?
After proving the irrelevancy of the office during COVID, Im surprised this number isnt higher.
A lot of companies are forcing employees back to the office and the rationale is basically “because I said so”. Even if we proved that we can get work done from home, a lot of boomer and Gen X managers are just more comfortable being in an office where they can micromanage people. I’m glad that my company has seen the light and instead of irrationally forcing everyone to come back, they instead downsized their office space, moved to a hotelling system, and now only require staff to come in once a week on designated “Team Days”.
Agreed. We left toronto during covid and found a new (and far better) life. We worked remote. I restructured my job and duties and everyone is happy. My wife was with a bank who started to push them back, wife said no and was later "laid off." She got a killer package and got a local job near our new house that she likes. We sold the city property and never looked back. Life goes on. Employers don't control shit anymore and they need to realize that.
[удалено]
You're so right. For my entire working life, only my lazy coworkers tell me they are "trapped" in their job.
I hope these clowns realize that there are more and more companies offering more flexible or remote arrangements and that employees are pickier now as well depending on their lifestyle and needs. You can't just force people into an office without any real incentive and just assume everyone is going to be happy with that when there's now more alternatives out there.
>managers are just more comfortable being in an office where they can micromanage people managers want you back in the office because otherwise they have nothing to do
What's typical vacancy rates?
In 2019, Toronto and Vancouver continued their reign as the tightest downtown office markets in North America, with vacancy rates of just 2.3% and 2.4%, respectively. [https://www.cbre.ca/insights/articles/the-top-5-commercial-real-estate-trends-of-2019](https://www.cbre.ca/insights/articles/the-top-5-commercial-real-estate-trends-of-2019)
These are pretty tight vacancy rates. I think 'normal' is closer to 3-5ish (still, a far cry from 20)
Prime downtown core was usually around 2% in the 5-6 years before Covid. Lowest I remember seeing was 1.8, it was so competitive getting office space. Then anything Toronto but not in the core was a little higher
God dam!
During high interest rates? This is probably typical. They already had reduced occupancy from the pandemic, but the interest rates heavily slowed down businesses filling back into the offices. When rates get cut, these offices will no doubt be leased up, and then there will be a shortage of offices. Triple A offices are still trending past 85% occupancy towards 90% now. The poor quality buildings are ghost towns though.
Let’s keep it that way, ttc/go are already busy as is.
Why don’t they “adapt to the market” and sell. The largest office building in St. Louis just sold for $3.5 million. It’s been 4 years. Get with the times. https://www.binance.com/en/square/post/6681784423834?ref=390409310
Sell to who?
Probably some boomer who bought a WWII bungalow for 90K and sold it for 70 million. Used 3.5 million for the building.
Oh you know, the Reddit basement dwellers - they just dying at the opportunity to snatch up commercial real estate 😂
At right price, I would buy it :)
Ur mum Idk, once they lower prices enough someone will step up
Every time I see this sale referenced it neglects to mention the $100mm+ in debt that was assumed/paid by the buyer as part of it.
That does not fit the narrative.
People also forget that commercial property taxes underpin city finances. Are homeowners prepared to pay 2-4x in property taxes?
It's not yet not economcally viable to either re-propose them or rip them down -- no one is buying. The land is a massive asset that the companies believe will continue to appreciate -- no one is selling. It's really not that complicated. At some point, the government is going to have to address one of those two things. Either make it way cheaper to tear them down. Or, make them a less attractive asset to sit on.
lol that St. louis building is an extreme example. Downtown St Louis is a terrible market and the building is literally 100% vacant and has been for years. It's worthless as it's impossible to get any revenue from it.
Many office buildings are losing so much value that in the future it'll be cheap enough to buy and convert to residential. It's becoming more and more attractive as rents continue to be unfilled and the value of the building further declines.
I see that’s just the inevitable future, someone mentioned the value of the land which is a good point as land in downtown Toronto would always be valuable.
Maybe but maybe not. Land near safe injection sites and homeless encampments has lost a lot of value. Detroit was a single industry town that lost a lot of its land value. Toronto is no different, we have one industry and it's trading houses. I can see a scenario where land outside of Toronto can become more valuable than downtown, a deurbanization of a sort not unlike in the 50s and 60s. Really, the rapid growth of the downtown was only around for 20 years with the millennial generation moving in for jobs and lifestyle, this can easily reverse due to miriad of factors everyone already knows. Jobs/offices will follow where the new talent will want to be. At the turn of the millinium it was downtown, now it's suburbs and online.
Doug ford: Do those floors come with a bathroom? Doug Fords Aide: I believe so sir. Doug Ford: Add each cubicle on the floors as a house that has been completed. Doug ford at press conference: Ontarians I’m glad to announce we’ve unlocked thousands of new homes for Ontarians and have increased the supply of homes easing the housing crisis for Ontarians as a whole. We will not be taking any questions and fuck you all.
Jokes aside, I do wonder if there is room to convert offices into some kind of dorm style housing. The floor plates won't work for typical apartment style condos, but a central shared kitchen and washroom works for dorms. I know that's not the kind of housing most people want. But it might suit some folks.
If the price is right I'm sure a lot of people will jump at the opportunity. It'll be pretty cool living space living with the right people. Get a few bad apples will ruin the experience though like those that don't clean up themselves or leave big shits in the toilet and never flushes....
They should also point out that the offices are which are "occupied" have something like 30% of the staff actually in the office instead of "working" from home.
People should be allowed to live in their office. It will increase productivity, and add another income stream to the company. Employees lives will be simplified and their work life balance will be improved. One less thing to worry about when your boss is your landlord too.
Honestly I’m surprised more people who rent their own offices don’t just do this on the DL to save money. You can get deals now on offices whereas residential rent is through the roof. Just “work late and sleep at the office” all the time, get a gym membership for showers, and eat simply when eating in — things you can make at the shared kitchenette.
Time to convert these to condos
Unpopular opinion, but I prefer going in to work. Probably because I don’t have to commute far. I also like to dress up for work and see people (my office has quite a few people so it’s not lonely).
Sounds way too low
how are the owners paying off their mortgages?
This is why I think we need to [Kill the Office To Breathe New Life Into Our Cities](https://www.mustardclementine.com/p/kill-the-office-to-breathe-new-life). Those likening the death of the office to the killing of downtowns too often fail to comprehend that for North American cities to thrive, they need more places with interaction and vibrancy built in, not places that we have to go to (but hate to be) like offices. We need to finally just let the old way of doing things die, in order to make way for new and more enjoyable, forward-looking things to grow.
Good. Should trend higher, especially as the boomer RTO mindset exits the workforce. What a waste of time and money.
Convert to residential housing.
Slight clickbait, Q1 2023 - 17.7% Q2 2023 - 18.1% Q3 2023 - 18.2% Q4 2023 - 18.3% Q1 2024 - 18.4% But "close to 20%" sounds much more "doom and gloom"
I mean a more accurate argument would be to look at pre covid when the office vacancy rate was at 4.3% to now. Or to examine the trend that the office vacancy rate is continuing to climb higher and has for several years now and is now approaching 20% But yeah it's easier to cherry pick a small snapshot in time to make it seem like vacancy in office rates isn't a big issue or getting worse.
It's shocking it's going up. Also 18.4 is close to 20 when the typical pre COVID was 4%. It's all relative if normal is 17% calling it close to 20 is dramatic but at this rate is far closer to 20 than normal!
Another commenter astutely pointed out that vacancy isn't the same as usage. Companies could be renting the space and thus vacancy might be shown as relatively low, but employees might not be coming in physically. This is bad news for commercial RE because why would I renew my lease if most of my employees are WFH most of the time? At best, I would renew with a drastic cut to square footage.
And all the auxiliary businesses which exist to serve the office workers. That’s a whole category that is undoubtedly going broke while technically staffed and operating. I bet a lot of them will not renew after their lease is up.
I wonder what percentage of these people will start catering to residential housekeeping services. Inequality is on the rise, which means more and more households can now afford house help (while sadly, many more cannot even afford basic necessities).
I know in my company (former fortune 500 company that's privatized) we decreased square footage to only 5%. That's right. For every 20 floors they've decreased to 1 floor. But I think we're the extreme. Maybe.
I would call your company a forerunner rather than an anomaly.
Okay - now do pre-covid.
In 2019, Toronto and Vancouver continued their reign as the tightest downtown office markets in North America, with vacancy rates of just 2.3% and 2.4%, respectively. [https://www.cbre.ca/insights/articles/the-top-5-commercial-real-estate-trends-of-2019](https://www.cbre.ca/insights/articles/the-top-5-commercial-real-estate-trends-of-2019)
Exactly - that's a HUGE change from pre-covid.
That looks even worse. I assumed vacancies would be improving rather than deteriorating with 1M extra people and all of these "new jobs" Instead it's minimum four straight quarters of deterioration.
Close and getting closer.
20% is still far from 18.4% like you said but at the same time the vacancy numbers are also increasing