There are high rises, and there are high rises. Some are for offices, the others for apartments. Generally, downtown areas have a generous supply of both. At least Vancouver does.
The pandemic resulted in more office employees “working from home” and many of them liked it so much that it has turned into a semi-permanent — or in some cases permanent — phenomenon. With fewer people occupying office space in the city, less of it is required (you would think) and in some cases office buildings are being converted to apartments. Repurposing, they call it. According to Moody’s Analytics, the conversion cost in the U.S. is somewhere between $100 and $200 per square foot. In Calgary, the government is providing $75 per square foot to help owners create more housing through repurposing.
So, it’s costly.
A report last week from CBRE Canada: Commercial Real Estate Services revealed the vacancy rate in office buildings 
(nationally) is up 18.1 per cent in the second quarter of this year. That’s the highest it has been since 1994, and up 1.6 per cent from the first quarter.CBRE says the rise can be attributed to the following factors: “a recession threat, interest rate hikes, tech sector weakness, tenants rightsizing, and a new supply of office space.”
Despite that, office buildings are still under construction, in part because the commitment to building them pre-dated the pandemic. CBRE reports that Canada-wide an additional 11.5 million square feet of office space was being built — and more than 50 per cent of it was pre-leased.
At the same time, there is less new construction with each year.
How much of the existing space will be “repurposed?”
Who really knows?
Photo courtesy of Danny Jongerius, unsplash