More than half (55 per cent) of Canadian employers have finalized their approach to balancing in-office and remote work, up from 49 per cent in the fourth quarter of last year, according to a new survey by Colliers Canada.
The survey, which polled nearly 300 employer tenants of Colliers’ properties across the country, also found the majority (86 per cent) of respondents indicated they’re satisfied with their current hybrid arrangements. However, the rise of hybrid working models are prompting companies to reduce their office space, with the national office vacancy rate expected to peak at roughly 15 per cent by the end of 2024.
In addition, the survey found office vacancy has risen to 14 per cent from eight per cent in 2020, but that figure is expected to fall in early 2025, barring a major economic downturn over the next 18 months. Colliers noted economic strength is tempering vacancy growth even as hybrid working becomes more popular, thanks to businesses expanding and new companies entering the market.
“With the imbalance in the employment market where the employees still have a lot of power — they’re making decisions to work from home longer, so that is impacting people’s desire to keep office,” says John Duda, president of real estate management services for Colliers. “So what we’re seeing on a regular basis is [employers] may keep their space, but they’re reducing it by 10 per cent or 20 per cent.”
The survey also found the average number of days companies are mandating employees to work in the office increased from 2.5 days in late 2022 to three days in the last quarter. It also found commercial tenants were 10 per cent more likely to renew a lease for each additional day their employees work in the office and companies were most likely to keep their current square footage of space if staff work in-office at least four days per week.
Duda says studies show there’s a disconnect between senior management and employees when it comes to work arrangements. Generally, senior management want people back in the office more and employees want to be home more, he adds, noting Colliers’ research has shown staff feel more encouraged to return to the office if their employer can ensure they have some level of privacy at work as they do at home.
However, a separate report from Robert Half Canada Inc. suggested hiring managers and employees might be starting to align on the issue of hybrid working more than three years after the coronavirus pandemic was declared. It found 54 per cent of hiring managers and 49 per cent of employees favoured hybrid working arrangements.
John Trougakos, a professor of organizational behaviour and human resources management at the University of Toronto, says the two sides were initially far apart on the issue when companies began wanting employees to come back to the office amid the pandemic. But managers have become more open to their staff working from home, while employees increasingly see the value of working next to their colleagues in-person.
“As time went along, I think we saw changes that organizations came to accept the fact that, ‘OK, we can allow employees some level of flexibility on this and we have the capability to make it happen’ and the employees, on the other side of the coin, really identified some benefits to coming back to the office.”