Post by
rustyblades on Nov 02, 2024 11:31am
Back to Office and Office Space Demand
The latest Toronto Occupancy index for October 1, shows that employees are on average in the office 71% of the time or 3.5 days out of 5. Listening to analysts in the media I get the impression that they feel the index needs to get to close to 100% before we see an improvement in office space demand.
I disagree. When the index was at 50% or less there was an opportunity to save on office space by sharing work stations, temporary work desks and other measures. When we hit 80%, people are in the office 4 out 5 days and there is very little opportunity for space sharing and the office space requirements are about the same as when people are in the office 5 days a week. The space requirements is not a linear curve correlated with the occupance index. Rather it is an asymptotic curve that is closing quickly, and there will be close to zero office space savings well before the occupancy index reaches 100%. I think 80% is close enough to zero for space savings.
So IMO with the October 1 index at 71% I believe we are close to a conventional supply demand situation for office space where the effect of remote work is negligible (at least for the Toronto downtown covered by the index).
The main point applicable to all office markets is that in office work does not have to reach 100% of pre-pandemic levels. 80% is good enough.