Unraveling the Office Utilization Myth: Examining Trends and Factors Impacting North American Workspaces

 

The North American office market has experienced a decline in office utilization, with the misconception that the pandemic and remote work were solely responsible. However, data shows that office utilization had been steadily decreasing even before the pandemic. The trend can be attributed to factors such as the rise of knowledge workers who can perform non-routine tasks from various locations, advancements in technology enabling remote work, and the dominance of office-using sectors like technology, finance, and professional services.

Before the pandemic, office utilization in the United States declined at an annualized rate of 1.4% between 2009 and 2019, and it further accelerated to 7.5% after the pandemic. During economic downturns, office utilization temporarily increases due to job cuts, leaving excess office space per employee until companies "right-size" after the recession. Knowledge workers, synonymous with traditional office workers, contribute significantly to employment growth in office-using industries.

Furthermore, talent shortages and demographic pressures, along with the growth of independent workers, have driven the rise of co-working spaces. Office densification, squeezing more workers into smaller spaces, has also been employed as a cost-saving measure.

In Canada, office utilization has been declining at a faster rate both before and after the pandemic, particularly in markets like Calgary and Toronto. Calgary's downturn resulted from the collapse of oil prices, while Toronto's decline can be attributed to factors such as long commutes, reluctance to use public transit, and the adoption of hybrid work policies by major banks.

In conclusion, the decrease in office utilization in North America predates the pandemic, with various factors contributing to the trend. The pandemic and remote work have only accelerated the decline. Understanding these dynamics is crucial for navigating the evolving landscape of office space and work arrangements.