Ever since the beginning of the pandemic, the GTA has seen more and more empty office buildings as an increasing number of workers and companies opt for remote or hybrid work.
This new option might be good for the workers and their employers, but it does leave one question: what will the city do about all of the empty office space that it now has cluttering up the skyline? Unfortunately, it seems like there might not be a lot done for a long time if a new report put out by the National Association for Industrial and Office Parks (NAIOP) Greater Toronto and commercial real estate consulting firm Altus Group is to be believed.
The report states that vacancy rates in these high-rise office buildings could go up to 16.5 per cent and as high as 45.7 per cent in the coming years, the former being based off of a hybrid work model of four days a week in office and the latter off of a two days a week in office schedule.
Currently, the office vacancy rate is already at levels we haven’t seen since 1995. The report noted there is currently 35 million square feet of office space available to lease in the GTA, more than double the amount in the first quarter of 2020. As that number continues to grow, this level of oversupply could stay around for multiple decades, according to the report.
One major factor keeping these buildings around is the massive backlog of construction projects in the GTA, meaning that any attempt to fully demolish these buildings will likely take decades to begin, let alone be completed.
This has led to several people calling for these buildings to be converted, to make use of them without having to invest a large amount of time, money and civic inconvenience to completely destroy and build something in their place.
Many are calling for the buildings to be converted into housing, as this would help alleviate both the problem of the oversupply of office buildings and the undersupply of housing driving up both home and rent prices. Projects doing just that are already underway in major cities like New York.
A recent study by real estate services company Avison Young found that around 900 office buildings in Toronto show potential for conversion into residential space.
While this sounds like a simple and efficient solution to both problems, there are several hurdles that could keep a project like this from getting underway. One of the major ones in the way is municipal policy that discourages lands designated for employment from being used for residential buildings.
The size and shape of a building’s blueprint also affects its ability to be converted, as some buildings’ skeletons are just not suited for the stress of being used as housing. On top of all that, the cost of remodelling the building is also a factor, as it might not be worth converting over just demolishing an office building and constructing something new on the land.
The NAIOP’s report found that, if all office buildings projected to have potential for conversion were turned into residential buildings, approximately 16,300 units could be created.
However, if costs for converting to residential buildings become too prohibitive, that isn’t the only option for these office buildings. Experts say that office buildings could also be transformed into educational centres or research labs and possibly even shopping centres.
