OFFICE MARKET REPORT | 3rd QUARTER 2021
Trends
The Vitality Index
As we approach the end of 2021, companies are faced with a long-anticipated question: is a return to the office still on track? If it is delayed, for how much longer? Will office occupancy ever look the same again? There are, of course, no certain answers to these questions. COVID-19 continues to throw curve balls our way, with wide variations in infection rates. At the same time, the dynamic between employers and employees regarding where to work has shifted, likely for good.
But what if there was a real-time window into exactly what was happening in major cities and leading industries across North America? What if we could see the volume of foot traffic updated constantly and compare it to pre-pandemic levels? Now, you can. Avison Young has launched The Vitality Index, a database that creates daily foot traffic estimates from representative office occupiers located in 20+ different cities*.
The Vitality Index utilizes data from Orbital Insight, Avison Young’s geospatial intelligence and location analytics partner. Orbital Insight aggregates anonymized cell phone location data geofenced to unique locations, to estimate total foot traffic in each city and industry. The data goes back to the beginning of 2020 in Canada, which allows comparisons to pre-pandemic levels. Leveraging Orbital Insight’s data, Avison Young has created an interactive AVANT by Avison Young dashboard that allows easy, real-time access to useful information to guide users through uncertain times.
Since fall of 2021, the Vitality Index has shown a slow but steady increase in foot traffic in Montréal. At the end of October, the data indicated that the average traffic was the highest it’s been since the beginning of the first lockdown back in March of 2020. While the situation is still volatile, it does provide some valuable clues as to how things are evolving.
Everyone is looking for the Goldilocks position – companies don’t want to move too early or too late. The Vitality Index is wildly important for people looking to understand what is happening in real-time and over time in major markets. It measures the pace so that leaders can make decisions based on concrete information and analytics.
As the recovery from the pandemic continues and companies chart an uncertain future regarding the physical workplace, any insight from real-time information like The Vitality Index will be critical.
* Austin, Boston, New York, Montréal, Edmonton, Houston, Los Angeles, San Francisco, Chicago, Washington (DC), Philadelphia, Denver, Atlanta, Calgary, Dallas, Toronto, Oakland, Silicon Valley, Nashville, Vancouver, Ottawa, Miami
The recovery begins
While the office market continues to be impacted by the pandemic, there is a sense that companies are starting to look ahead and plan for the new normal. In recent weeks, there’s been growing interest from employers to bring workers back to the office, albeit on a hybrid model basis. It seems that companies are starting to see the limits of remote work when it comes to overall performance and efficiency. In fact, according to a recent survey by the Urban Development Institute (UDI), remote work seems to be losing its appeal with less than 50% of respondents now working partially or fully at home compared to 77% back in April. It will be interesting to see how the situation evolves over the next few months since the efforts to bring employees back to the office are not in full swing yet. Since November 15, Quebec civil servants have returned to the office two days a week, while Quebec aims to bring 50% of public service personnel back to hybrid mode by January 14.
Nonetheless, thanks to the gradual lifting of restrictions, malls and retailers have already noticed a jump in foot traffic over the past few months, which bodes well for the city’s recovery.
Downtown Montréal continues to maintain its level of attraction for corporate users despite office availability being on the rise. As lease expiries come to term, many companies are taking advantage of the market conditions to relocate to better quality offices while reducing their footprint. It’s interesting to note that in most cases where companies decided to relocate, they chose to remain in Downtown. They also tend to sign shorter term leases but the optimal solution is to secure flexible conditions.
As the recovery efforts continue, the key driver will be employee experience. Companies are in the delicate position of having to balance performance, safety and employee engagement, and the workplace is at the center of those decisions. For the time being, companies are making significant workplace changes to allow for the safe return of their employees. This is a clear indication that employers still value their physical workplaces when it comes to collaboration and work culture. As the war for talent rages on, companies are realizing that the work environment has a crucial role to play.
For the first time in history, five generational groups are working side-by-side, and companies will need to adapt their strategies based on the different working styles and workplace preferences. These factors posit complex possibilities for organizations and employees to consider as they navigate through the recovery.
As the recovery efforts continue, the key driver will be employee experience.
