Canadian Businesses: Government Lags on RTO

Canada’s businesses appear to be having more success than their US counterparts in luring workers back to the office, but they’re not happy that the Canadian government is “significantly lagging” in getting public-sector employees to return to government offices, according to an open letter sent this week to Prime Minister Justin Trudeau’s cabinet.

The letter, which was signed by 32 business associations, including the Canadian Chamber of Commerce and the Business Council of Canada, said the government—Canada’s largest single employer—has set a poor example with a patchwork of RTO policies when it should be leading the effort.

“As businesses in these communities assess their long-term viability given the pandemic’s damaging effect on downtown centers, restoring normal economic activity requires the federal government to act now,” the letter said.

The letter, addressed to Treasury Board President Mona Fortier—Canada’s Treasury Secretary—is a counterpoint pressure the government is getting from labor unions to show continued flexibility on remote work.

Fortier currently is negotiating a new wage pact with federal workers—talks that have hit an impasse as workers, led by the Public Service Alliance of Canada, seek higher wages in the midst of spiraling inflation, Bloomberg reported.

According to the letter from the business leaders, the Ottawa-Gatineau area—the region in Canada that has the highest concentration of federal government employees—has the lowest return-to-office rate of any provincial capital in Canada.

“We strongly urge the federal government to lead the way to a return to normal that will both foster economic growth and ensure that all Canadians receive the quality of public services that they have a right to expect,” the business leaders said, in the letter.

Based on CBRE’s Q3 office market report for Canada, three Canadian cities are boasting three of the five-lowest vacancy rates in North America: Vancouver at 7.1%, Ottawa at 11.5% and Toronto at 11.8%.

CBRE noted that these cities started with lower vacancy rates before the pandemic, but also said their performance reflects the stability of Canada’s relatively small number of major building owners.

Canada’s office market recorded 2.1M SF of positive net absorption in the third quarter, though much of this was attributable to the delivery of pre-leased new supply. However, it you subtract that component, the national net absorption would have remained positive, totaling 207K SF, CBRE said.

The national office vacancy rate stood at 16.4% in Q3, a decrease of 10 bps from Q2, which CBRE attributed to further improvement in the suburbs. Vacancies in downtown markets remained stable at 16.9%, the first time since the onset of the pandemic that the national downtown rate did not increase.