Northern Ontario office market ‘frozen’ as businesses wait and see working from home

A year after offices emptied in northern Ontario, it’s still unclear how many of those workers will return.

“It’s pretty much business as usual, everyone is frozen, in slow motion,” says Paul Zulich, executive director of Zulich Enterprises, which owns some 300,000 square feet of retail space in the Sudbury area.

“People don’t make decisions.”

Zulich says he’s had a few nonprofit tenants decide to go totally virtual, but most others decide to go month-to-month or sign one-year contracts instead of longer-term leases.

He says his company currently has around 5% vacancies on the business side, which was within the normal pre-COVID range.

Zulich says he agrees with experts who predict that a mixed workplace with more people continuing to come from home at least part of the time could reduce the office footprint by 10% post-pandemic , but he says extra space might be needed for physical distancing anyway.

Elm Place property manager Robert Green says they’ve had a few offers for empty office space in their downtown Sudbury shopping center and office complex, some of which expect a deal in due to the pandemic.

Vista Hospitality CEO Amin Visram (right) and property manager Robert Green show empty offices at Elm Place (formerly the Rainbow Centre) in downtown Sudbury. (Erik White/CBC)

“A lot of people are kind of waiting to see. So there are a lot of offers that we’ve seen where people are kicking,” Green says.

“We really haven’t seen the dust settle yet.”

He says the office side of the old Rainbow Center is about 20% vacant, but that’s because of very large spaces looking for a tenant, which has attracted some interest over the past year.

Green says he doesn’t fear renting those offices will become even more difficult in the years to come, predicting that “the pendulum won’t swing too far” toward work-from-home arrangements.

“It was different, but still very active,” says Chris Tammi, manager and official broker at Mallette-Goring in Sudbury.

“It’s not necessarily that the market is worse, it’s just that the market is different. A lot of companies are waiting to see how things play out.”

Experts predict that with more employees working from home, the average office footprint could shrink by 10%, but additional space may be needed for physical distancing. (Pierre-Paul Couture/CBC)

He says in the coming years, we’ll likely see more short-term office uses, like the “hospitality” trend where home-based workers book space for a few days at a time.

Tammi says there are lots of office spaces in Sudbury that were built in the 1970s and now need expensive upgrades, which scares off many potential tenants, especially with rising construction costs these days. last years.

James Caicco, owner of Century 21 Choice Realty in Sault Ste. Marie, says a lot of people seem to assume the office buildings have been pretty much abandoned over the past year.

“We don’t see that. The commercial sector and the industrial sector have been relatively strong,” he says.

Realtor Chris Tammi says some office space in downtown Sudbury needs to be outdated and was difficult to rent even before the pandemic. (Erik White/CBC)

Caicco says he is also seeing an increase in the number of people from southern Ontario moving to the Sault and some bringing their businesses with them.

“I get a call from other real estate agencies in Ontario who send clients here almost every day now,” he says.

“It’s residential, but there’s a commercial component. You can rent an office in our downtown area for $200.

Jose C. Birney