Canada’s Push for Federal Workers to Return to the Office: Impact on Real Estate

Remote work, once a temporary response to the pandemic, has solidified its place in Canada’s employment landscape. This shift has significantly influenced both commercial and residential real estate across the country. As the government and businesses redefine the balance between in-office and remote work, the evolving trends in office usage, migration patterns, and housing demands continue to reshape urban and suburban environments.

The Federal Push for In-Office Work

In a significant move to revive downtown economies, the Canadian government mandated that its federal employees return to office work for at least three days a week starting in May 2024. This decision aims to combat declining foot traffic and spending in major cities, which have seen drops in economic activity as workers relocated to smaller towns and suburbs. Cities like Toronto and Ottawa, which have historically thrived on office-centric businesses, face rising office vacancy rates as the workforce continues to embrace remote work options.

Ontario Premier Doug Ford and the mayor of Ottawa have voiced strong support for the mandate, urging a return to in-person work to counteract the economic fallout in city centers. However, the policy has sparked resistance from employees, represented by the Public Service Alliance of Canada (PSAC), who argue that remote work boosts productivity and improves work-life balance. Surveys reveal that 91% of federal workers oppose the return-to-office mandate, citing issues such as rising commuting costs, time spent traveling, and a general preference for flexibility.

Hybrid Models and Commercial Real Estate Adjustments

As the tension between in-office work and remote work continues, the hybrid model—where employees split their time between home and the office—has become a middle ground. Canada leads the developed world in the number of remote workdays, with many employees now spending around three days in the office and two days working from home. This balance is driving innovation in how businesses approach their office spaces.

To entice workers back into the office, companies are investing in making workplaces more inviting. Offices are being redesigned to feel less like traditional workspaces and more like comfortable, amenity-rich environments. According to real estate experts, features like reservable desks, collaborative lounges, high-end kitchens, and even outdoor meeting areas are being incorporated into office buildings to make the office a place workers want to be, rather than have to be. There’s also a growing focus on creating healthier environments with quiet rooms for meditation or prayer and wellness amenities like fitness areas.

Despite these efforts, the real estate market is seeing a fundamental shift. Businesses are downsizing their office footprints to better align with hybrid work models, and older office buildings with high vacancy rates are struggling to attract tenants. In cities like Calgary, some office buildings have been converted into residential units or hotels. While these conversions are costly, they offer a solution to the growing number of empty office spaces across Canadian cities.

The Impact on Residential Real Estate

Remote work has also had a profound effect on housing markets across the country. With the flexibility to work from anywhere, many Canadians have chosen to leave expensive urban centers in favor of more affordable suburban and rural areas. This trend is particularly noticeable in Ontario and British Columbia, where cities like Greater Toronto and Vancouver have experienced skyrocketing home prices.

In response, many people are moving to provinces with more affordable real estate markets. Alberta, in particular, has seen a massive influx of new residents. In 2023, the province set a national record for interprovincial migration, with more than 55,000 people moving to Alberta, including a significant number from Ontario and British Columbia. Alberta’s lower housing costs, lower taxes, and proximity to natural landscapes have made it an attractive option for remote workers looking for a better work-life balance.

In comparison to Greater Toronto, where the average home price exceeds $1.1 million, homes in Calgary are about 104% cheaper. Edmonton offers even more savings, with housing prices nearly 193% lower than those in Toronto. This affordability is driving migration to Alberta, where residents can enjoy spacious homes and natural beauty without sacrificing proximity to major cities.

Migration to Atlantic Canada and Emerging Trends

The Atlantic provinces have also become a hotspot for remote workers seeking a quieter, more affordable lifestyle. Known for their relative isolation and successful handling of the pandemic, provinces like Nova Scotia, Prince Edward Island, and Newfoundland saw a surge in migration during and after the pandemic. The “Atlantic Bubble” region maintained lower COVID-19 infection rates, making it particularly attractive for those looking to escape the crowded and more heavily impacted provinces like Ontario.

Nova Scotia, in particular, has seen a notable increase in home sales and property values, as more people relocate from other parts of Canada. Between 2020 and 2021, home sales in Nova Scotia rose by 74.89%, with a corresponding increase in property prices. Halifax-Dartmouth, the region’s largest urban area, experienced a 16.11% jump in home prices in 2022, followed by smaller increases in 2023. The influx of new residents, coupled with a growing remote workforce, is transforming the real estate market in the Atlantic provinces.

Looking Forward: The Future of Real Estate in a Hybrid World

The long-term implications of remote work on Canada’s real estate market are still unfolding. While some sectors, particularly office spaces, are seeing rising vacancies, the demand for housing in suburban and rural regions is expected to remain strong. Companies are likely to continue reducing their office footprints, sub-leasing unused spaces or converting them into residential or mixed-use buildings. This growing supply of sub-leased office spaces could present opportunities for businesses looking to relocate at a lower cost.

At the same time, residential developments are being built with remote workers in mind. Many new condominium projects now include shared workspaces, boardrooms, and other office-like amenities for residents, blurring the line between home and office.

Investors, too, are responding to these shifts by reallocating capital away from office and retail spaces toward multi-family residential developments and industrial properties. The real estate market will likely continue evolving to meet the needs of a hybrid workforce, with a focus on flexibility, sustainability, and the integration of home and work environments.

In conclusion, remote work has had a profound and lasting impact on Canada’s real estate market. As hybrid work models become the norm, both residential and commercial real estate sectors must adapt to the changing needs and preferences of workers. Whether it’s downsizing office spaces or rethinking residential developments, the future of real estate in Canada will be shaped by the evolving nature of work in the post-pandemic world.