A prominent Canadian office landlord said bank CEOs need to “find a backbone” and start bringing staff back to the office after more than a year of working from home.
Downtown Toronto’s office hub has been largely empty since the start of the pandemic, leading some businesses to give up their office space and devastating the restaurants and other services that cater to office workers.
The banks, among the largest tenants, have continuously delayed the return to the office as the country shouldered multiple waves of COVID-19 cases.
But now that cases are declining and more of the population is vaccinated, Allied Properties REIT ’s CEO said banks need to bring employees back.
“I am dumbfounded by the lack of leadership from the chartered banks,” said Michael Emory. “They need to find a backbone.”
Mr. Emory is in the business of office leasing and has a vested interest in seeing them teeming again. He did commend the business community for making the difficult decision to send people home at the beginning of the pandemic.
Now, he wants them to take the lead. The return of bank employees would breathe life into the financial district and would likely give other companies confidence to bring back their staff.
The city has been under various lockdowns for more than a year and the overriding message from public-health officials has been to stay at home. Until quite recently, only essential services were allowed to be open.
Before the health crisis, Toronto’s office market had become a top destination for tech companies and other businesses.
Then, the vacancy rate was 2 per cent, according to commercial real estate firm CBRE. It is now 10 per cent and will likely continue to climb as a number of new office skyscrapers get set to open over the next year.
Landlords are anxious for businesses to return to the downtown core. A year of remote work has already caused companies such as PricewaterhouseCoopers, Cisco Systems Inc. and Oracle Corp. to give up some of their space.
Others including Sun Life Financial and Intelex Technologies Inc. have decided to keep their office space and allow employees to choose when they want to come in. Many other companies are mulling the future of work and don’t know how much space they will require.
For the Canadian banks, they are considering bringing staff back in the fall. They plan to do so gradually and are working to design more flexible schedules. Royal Bank of Canada , Toronto-Dominion Bank , Bank of Montreal and Canadian Imperial Bank of Commerce have promised at least four weeks’ notice before staff are asked to start coming in, and have yet to issue that order.
That is a sharp contrast to the United States, where a couple of the big banks, Goldman Sachs and Morgan Stanley , have told employees that they are required to be back in their Manhattan offices.
In Canada, where executives are afraid of speaking out, Mr. Emory’s comments stand out.
The real estate developer has taken a hard line on the return to the office and Allied staff are expected to show up, though on a rotational basis for now. Mr. Emory said the first shot of the vaccine is a requirement to return. “We can’t tell someone to get a vaccine,” he said, but also added: “It is a condition of coming back to the office.”
Allied has about 400 full-time staff across the country, with 150 in Toronto.
Mr. Emory said he was not going to create a vaccination passport, nor was he asking for proof of immunization. Asked if he would allow staff to work from home a few days a week, he said: “If someone says they want to work from home indefinitely, it will result in us parting ways.”
Mr. Emory’s business operates dozens of boutique office buildings in downtown Toronto, Kitchener, Ont., Ottawa, Montreal, Calgary, Edmonton and Vancouver. He was at the forefront of the trend to refurbish old spaces and is known for his trendy aesthetic throughout the west end of Toronto.
His top 10 tenants are mostly tech companies. In the first quarter of this year, more than 90 per cent of his properties were leased.
His company, along with RioCan REIT , is developing a large office complex west of Toronto’s financial district. The major tenant in that building is Shopify Inc. , which committed to taking more space after its CEO shocked the real estate industry by saying staff would continue to work remotely and that “office centricity is over.”
Mr. Emory said none of his tenants have said they need to reduce space because of remote work. He said on the contrary, Allied has seen a significant number of tenants say they want more space.
With a report from James Bradshaw in Toronto
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.