Could the Pandemic Make Lower Office Floors More Desirable?
Toronto-based Avison Young's head of research in Canada thinks he may have a key advantage over some other office workers whey they head back to cubicles. But he'll need to stay in shape.
Bill Argeropoulos recently mused about the fact that the real estate firm’s global head office is on the fourth floor of a 26-floor tower in downtown Toronto — not exactly the penthouse view but maybe the perfect location in the age of COVID-19 because he has the option of the stairs or the elevator.
"As I contemplate my own return to the office, I realized that I have more than one option to get to and from my office floor — a luxury others may not have, but something organizations may want to consider," said Argeropoulos in a blog post describing his office at 18 York St. in the city's financial core.
"Prior to the COVID-19 pandemic, the only time I would take the stairs was during a scheduled or surprise fire alarm drill (or when I was guilted by a colleague that I needed the exercise)."
His realization led him to analyze office buildings of four floors or fewer in Canada's big six markets: Toronto, Montreal, Ottawa, Calgary, Edmonton and Vancouver.
"While some workplaces are physically being modified to accommodate social distancing measures, the same can't be said for the elevators that carry thousands of workers up 50, 60 and even 70 storeys in Canada's major urban markets," said Argeropoulos.
"Most commercial elevators can carry about 10 to 12 people at a time, but public health officials’ advice to stay at least two metres apart makes that kind of capacity impossible. I understand that, on a normal business day, the standard wait time for an office elevator is approximately 35 seconds — but in today's world of social distancing new codes of elevator etiquette and hygiene mean wait times will skyrocket."
Argeropoulos said among the big six markets, buildings of four floors or less make up 53% of the total number of buildings and 26% of total existing office square footage.
"I think low-rise office buildings are at least going to offer an alternative to these high-rise buildings," Argeropoulos said in an interview, adding it's probably too early to see the impact on leasing.
Mark Rose, chief executive of Avison Young, said in May that returning to the office would be voluntary for the firm’s employees who can perform their duties remotely through Dec. 31.
Argeropoulos said he went into the office this month, but he found it a bit surreal, and for now, he can do his job just as effectively from home.
"I think the landlords are making tremendous efforts to keep everything clean," said Argeropolous, who took the elevator on his first trip back. "But I just wonder as people come back whether there will be lineups [for elevators] and force some people to climb some floors."
The suburbs have a greater opportunity for stair climbing, with 67% of suburban office buildings in Canada having four floors or less. That figure represents 45% of total suburban square footage. By comparison, in downtown markets, only 20% of buildings are four floors or less, according to Avison Young's research.
Traditionally rents have always been higher on upper floors with their grand views of cities, but could that flip with demand shifting, at least temporarily?
"There is a lot of ego space at the top end of the building," said Argeropoulos. "Look at a place like Vancouver, mountain views have commanded more. It's not to say this will last forever, but if we were to live in COVID world, I wonder if the low-rise price would be priced differently than high-rise going forward."
