June 29, 2020 | The Rethink

Covid log date 6.29.20.

It’s now been more than a hundred days since the giant office towers emptied into the Bay Street canyon below, as furloughed workers scurried furtively underground. Their last subway ride. For many, the final time rubbing shoulder-to-shoulder against a stranger. Without a mask. At that moment they were employees for whom ‘going to work’ had meant, well, going to work. Not going home.

But that was then. The changes since have been breathtaking. This week came more signals the world these souls knew, so distant back in February, is kaput – or soon to be. Witness the following words, part of a memo sent to the worker bees of a major financial outfit with offices in the cores of most big Canadian metropolises.

The question is: can we be effective at work without needing to be in the office all the time? Based on how the last few months have gone, the answer is a resounding yes. Looking ahead, my hope is to build an environment for my team that incorporates some of the flexibility we have gotten used to into the post-pandemic work world, whenever that arrives. Think in terms of a greater emphasis on results and output rather than evaluating people by their presence in the office or the hours that they work.

Can you imagine the big poohbah telling you that six months ago? Offices are optional. Hours uncounted. Remote is fine. Flex is the new religion. Stay in your skivvies, if you want, but remember to dress above the waist for Zoom. Results matter. No need to haul your butt downtown. Ever, maybe.

This all makes perfect sense for corporations. Dump the office overhead. Pare down the infrastructure. Let people stay at home and buy their own hand sanitizer. The bottom line actually gets fatter. Employees are less stressed. Child care issues resolved. The dog loves it. No commute. No traffic. No smelly transit buddies. No deathly elevators. Just a thick web of IT people hanging it all together. Yes, they work from home, too.

So will Covid turn out to be a long-term employment game-changer, for both corps and the folks who toil for them? If so, big ripples. Downtown cores, somewhat depopulated of commuters, will not sustain the thousands of small businesses who located there solely to suck off the foot traffic. Falafel and sushi booths, dry cleaners, dental clinics, office supply stores, and endless retail outlets, many located in the underground pathways that used to be clogged with people in business attire.

Urban condos? The impact could be huge over time. Fewer jobs in the canyon, so why would you compromise paying hundreds of thousands to live in 500 square feet of concrete? And besides making high-rise lifts totally terrifying, the virus is impacting the entire market. “The pandemic health concerns, coupled with reduced employment and hiring activity, has resulted in less immigration and reduced in-migration into the GTA,” says a report from Rentals.ca. “These consequences of the pandemic have significantly reduced rental demand at the same time as supply is increasing via short-term rentals and high-rise apartment completions.”

Meanwhile Airbnb has collapsed, throwing a ton of units on the market and depressing rents. “I live and own a downtown Toronto condo,” writes Greg.

A recent Toronto Star article stated my building was Airbnb’s 3 biggest revenue source for a single building. Since the state of emergency was declared short term rentals have been banned. The operations of the building, lobbies, concierge desk, elevators and common spaces have dramatically improved since, this building as I imagine most condo buildings were not designed to be hotels. The current state of the building is 46 units for sale, 146 for rent. The management office recently issued a memo saying to expect delays when registering new tenants due to the high volume.

Covid has also put the ice on immigration, while Ontario (and BC) still have an anti-foreigner buyer tax – which doesn’t look so genius anymore. And guess what happens when the pandemic eases and the Landlord/Tenant board gets back into operation, allowing owners to punt all those scuzzy renters who stopped paying? More supply on the market. Already rents are falling as available rental listings overwhelm demand. Rents are about 3.5% less than a year ago, and declining monthly.

And then there’s this: the pandemic flight to the boonies. Why pay $2.4 million for an okay house in mid-town Toronto (to have a 20 minute drive downtown) when you can get a mini-mansion for half that amount in Kingston, Grimsby or Kitchener – and work remotely? Why pay $800,000 for a 750-foot, two-bedroom condo on the 34th floor of a teeming downtown hi-rise when that will buy you a townhouse with a garage and an actual backyard in Burlington or Ajax?

It’s already happening, say the realtors. Sales in Halton are up 22% and in Durham by 8%, while falling 13% in Toronto. Same seems to be occurring in YVR, as activity flourishes in the Fraser Valley, on the Island and in the OK. It’s taking place in the States, too, as more New Yorkers and Bostonians head for the burbs.

After all, if you have to work from home, then home should be, like, awesome.

Bosses who talk nice to you, and valid reasons to ditch urbanity. Plus you can hide behind a designer mask. Nice work, bug.

Garth Turner June 29th, 2020

Posted In: The Greater Fool

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