Office vacancies rising in Waterloo Region as businesses adapt to pandemic challenges
The shift to working from home is changing the landscape of Waterloo Region's downtown core.
More than a quarter of office spaces are currently vacant, and it could get worse.
'For Lease' signs have popped up in downtown Kitchener, including Duke Street, Charles Street and King Street.
Those are indicators of the rising office vacancy rate in the region.
Dean Mariani, a sales representative with the commercial real estate firm CBRE, said fourth quarter statistics from 2021 show 27.1 per cent of downtown office spaces in the tri-cities are empty. That's up from 22.2 per cent in the third quarter. That report can be found here.
The main factor is the shift away from physical workplaces.
"In the environment we're kinda working in, it was an opportunity to put your space in the market and see what happens," said Mariani.
The transition to a remote workplace was seamless for some local businesses.
"We made the decision pretty early on, once everyone went remote and it seemed to be working really well," said Tim Peckover, the Manager of Marketing for Smile.io.
The customer loyalty software company, which was formerly based in downtown Kitchener, switched to remote work back in April 2020. They decided to sublease their office before finally moving out in July 2021.
"It was simple because we had the tools already in place for the remote team that we had," said Peckover.
Now that they've made the move, Peckover said Smile.io can now grow beyond the confines of a permanent office.
"Only headquarters in Kitchener and an office space didn't make sense with the global footprint that we wanted to have," he explained.
Mariani said the trend of tech companies subleasing contributes in part to why the region has the second highest vacancy rate behind Calgary, according to the markets surveyed.
Still, the decision to let go of an office space can be a difficult one.
Don Bowman, CEO of the Kitchener software company Agilicus, said he may consider letting their lease expire in September now that all 12 of their employees are working from home.
"I would prefer not to do that, but at the same time, I have a duty to my shareholders and we're not making good use of capital," Bowman said.
Agilicus plans to reassess their situation in the coming weeks.