Downtown office space stabilizing


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Winnipeg’s downtown office market has stabilized for the time being, but continues to struggle in the post-pandemic world, a recent report says.

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Winnipeg’s downtown office market has stabilized for the time being, but continues to struggle in the post-pandemic world, a recent report says.

The national report by CBRE says while downtown office vacancy rates in Manitoba’s capital have dropped slightly since last quarter, 16.1 per cent of units are still searching for tenants.

It’s a far cry from the 10.8 per cent vacancy rate the city boasted in 2018, ahead of the pandemic.


Metric Marketing has shifted to flexible work schedules, only requiring employees to come into the office on Wednesdays and allowing them work from home the rest of the week should they choose.

Winnipeg isn’t an anomaly in this space. The national vacancy average in the epicentre of major cities is 16.9 per cent. Of the 10 cities surveyed, Vancouver boasts the lowest rate at 7.9 per cent while Calgary falls in last with 32.9 per cent of its spaces still barren.

“A reverse form last quarter, vacancy decreased downtown while increasing in the suburbs,” the 20-page report says of Winnipeg. “Overall sentiment around a slow return-to-office, however, has seen the downtown struggle to make a significant rebound. Instead, we are seeing companies choose suburban locations, favouring short commute times and more competitive rates.”

Indeed, of the 378,112 square feet of office space the city has to offer in suburban areas, just 9.6 per cent has yet to be filled, as net lease rates have dropped slightly to $16.45 per square foot.

Sean Kliewer, commercial broker and vice-president of Colliers International, suggests the numbers in the national report may not tell the whole story in Winnipeg, though.

The 10.8 per cent vacancy rate in 2018 jumped a percentage point in 2019 after True North Square was built. While the pandemic surely forced some businesses out of office, swelling the number of barren spaces to 13.1 per cent, during the outbreak there was an additional 200,000 square feet of office space built in Winnipeg.

While Kliewer admits the downsizing of many companies throughout the pandemic contributed to the higher vacancy rates, parlaying that with new builds made the numbers appear worse than it actually was, he argued.

“So if you really look at (the increase in vacancy rates), I say that’s predominantly correlated to supply. We’ve had vacancy go up because we’ve had a significant amount of new buildings added to the market, rather than a huge exodus of companies,” he said.

While Kliewer conceded there are still several factors the Winnipeg market is battling coming out of the pandemic, such as more people working from home and safety concerns around downtown, he’s still optimistic about the future of businesses making downtown their home base.

“It’s an interesting time to say the least,” Kliewer said. “I think we’re starting to see some stabilization in the sense that the early days (of the pandemic) were, ‘God, is anyone ever going to come back to an office building?’

“That’s been stabilized to realize that, ‘Hey, there’s absolutely a reason and a purpose behind having an office space,’ and that is sort of the trend that’s going to be moving forward.”

Kliewer argued there are still many reasons for businesses to occupy spaces downtown over those in suburban areas, beginning with the experience for their employees. Downtown remains an excellent location for those who commute via transit and is host to a wide range of services that are within walking distance.

“The main drivers continue to be, ‘It’s my space, I walk in, I don’t have to deal with an elevator,’ I’m kind of in and out,” Kliewer said of the typically single-floor suburban offices.

“When you have a business downtown — and I have some tenants that are coming from the suburbs back downtown right now actually — one of the reasons they like is they park, now they can walk to Earls, they can walk to Mottola Grocery, there’s amenities all within your node that you don’t have to go and start your car in December. When you’re in the suburbs, now I have to drive somewhere else.”

Workplace flexibility is now entrenched across most industries, allowing employees to work from home and a virtual meeting room to act as a home base. But Kliewer pointed to the modern design of offices as being an incentive for employees to return to work.

Newly designed units can now include collaboration spaces, fun rooms and places for employees to decompress throughout the work day.

Such is the case for Justin Nedecky’s Metric Marketing, which has held its current office in Winnipeg’s downtown since 2012 and renovated its building to include a mezzanine area with meeting spaces and quiet rooms for employees to work in.

Nedecky, the COO and one of the founders of Metric Marketing, a local marketing agency, explained that the company moved from its building in the suburbs to the Exchange District in 2009 when it was still known as Canada’s Webshop. In 2012, when the company rebranded to Metric Marketing, it moved to its current digs at 291 Garry St.

“At that time (2009), for us, (downtown) was the place to be,” Nedecky said. “Central, a lot of clients were downtown, that’s the business culture, right? It just made sense to be there. It didn’t make sense to be in the suburbs somewhere.

“There’s a difference between now and then, right? Let’s say until the pandemic, yeah, absolutely an advantage for employees. It’s centralized for transit, there’s lot of places to eat and contemporaries often have their offices downtown, so downtown is just the hub, right?”

Metric Marketing now offers its employees the option to work at home or in the office most days, Nedecky explained. The only exclusion being Wednesdays, when all employees are required to gather at the office for “Culture Day,” a day dedicated to planning lunch events, lunch-and-learns and special occasions for the company.

“I mean, it just made sense,” Nedecky reiterated when talking about being downtown prior to the pandemic. “It still does to some extent, but, of course, much less. Much less important in this new world, all being downtown in the same place.”

Metric Marketing renovated its office in 2018 after cutting ties with a tenant that resided on the first floor of the building. It just so happens the renovations were completed six months before public health restrictions heightened, owing to the pandemic, leaving employees with little time to bask in their new space.

“We wouldn’t have done anything differently,” Nedecky said. “Right now, for us, having a downtown space is a benefit. It’s seen as a legitimizing factor now rather than an obligatory thing.”

Kliewer said Winnipeg is a city that is under-demolished, meaning there are a lot of older buildings in downtown. That is changing, however, as the recently finished True North Square was the city’s first major office building built in 30 years. That has left Kliewer feeling optimistic that a healthy market is on the horizon.

“There’s more cranes downtown right now than there have been in a long time. That tells you that people are investing downtown.”

Twitter: @jfreysam

Joshua Frey-Sam

Joshua Frey-Sam

Joshua Frey-Sam happily welcomes a spirited sports debate any day of the week.

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