Edmonton businesses reduce staff and hours to make up for lack of office workers

Let’s Grill Sushi & Izakaya used to see a lot of walk-in customers before the pandemic, but business at the Jasper Avenue restaurant hasn’t fully rebounded since office workers left downtown in droves two and a half years ago.

Some of the restaurant’s old customers have returned, but only a small fraction, according to its owner.

“It’s not even half of the number we used to have,” said owner Shaosi Wang, who is reducing staffing by a third, closing the restaurant on some days, and even considering leaving downtown.

The picture is similar at Board N Brew Cafe, a board game cafe on 103rd Street, south of 100th Avenue.

Graeme Ly, one of the cafe’s owners, said the drop in traffic has been “quite drastic,” and he too has been cutting back on staff and closing the cafe one day a week.

“Even with the help from the government, a lot of us are just surviving,” he said.

Many local businesses hoped workers would return to downtown after two years of remote work, but vacancy rates in the core remain high and multiple commercial real estate experts told CBC News they aren’t expecting that to change soon.

Recent market reports from Colliers, CBRE and NAI Commercial Real Estate all describe the vacancy rate in downtown Edmonton as high: between 11 and 22 per cent.

According to CBRE’s figures on the Edmonton office market, several downtown landlords are offering “aggressive incentives,” such as early occupancy and higher tenant improvement allowances, in buildings with high vacancy.

NAI Commercial’s second quarter market report called the office vacancy rate “the thorn among Edmonton real estate roses,” particularly in the downtown area.

The Edmonton Downtown Business Association predicted most workers would be back in the office by July, but the reports from Colliers and NAI Commercial both said that return has not happened as quickly as expected.

“The mindset of the employee is, they really do prefer at least some form of their work-life being remote, and I think the numbers speak to that,” said Chad Snow, NAI Commercial’s president.

Chad Snow is president of NAI Commercial Real Estate in Edmonton. (Trident Photography)

Jeff Simkin, a senior vice president with CRBE in Edmonton, said there is a correlation between companies’ size and whether they offer hybrid work arrangements.

Simkin said the city’s suburban market, which has been relatively strong, is primarily characterized by local and regional tenants.

“In downtown, there’s a higher concentration of national and global tenants, and many of those companies do have a hybrid model in place,” he said.

Edmonton part of national trend

Edmonton isn’t the only Canadian city where the suburban office market is outperforming the downtown one.

CRBE’s most recent national report on office markets found that downtown centers are increasingly lagging behind suburban markets.

“This is the second consecutive quarter where the suburbs posted a lower national vacancy relative to downtown centers, something previously never seen in the Canadian office market,” the report said.

According to CRBE’s data, the downtown vacancy rate was higher than the suburban one in Edmonton, Winnipeg, Halifax, London, Ottawa, Vancouver, the Waterloo region and Calgary.

Looking ahead

Some market-watchers predict the vacancy rate will continue to increase in downtown Edmonton as employers who may have been locked into 3 to 5 year leases during the pandemic reach the end of those contracts.

Simkin said he expects more national tenants will implement a hybrid work model, reducing their footprint downtown, and some financial institutions may start subletting space in the core.

Others see signs of hope that the vacancy rate could move in the other direction.

“I think we’re very close to where the bottom of the market is,” said Taylor Riar, a senior associate with the office team at Colliers in Edmonton.

“We are starting to turn the corner based on the level of activity that we’re seeing,” he said.

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