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 there two and a half years ago.
Some of the restaurant’s former customers have returned, but only a small fraction, according to its owner.
“It’s not even half the number we had,” said owner Shaosi Wang, who is cutting staff by a third, closing the restaurant on certain days and even considering leaving downtown.
The image is similar to the 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 “pretty drastic”, and he too has cut staff and closed the cafe one day a week.
“Even with government help, many of us are surviving,” he said.
Many local businesses hoped workers would return downtown after two years of working remotely, but downtown vacancy rates remain high and several commercial real estate experts told CBC News they are not sure. Didn’t expect that to change anytime 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%.
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 lower-rate buildings. high vacancy.
According to NAI Commercial’s second quarter market report, the office vacancy rate is “the thorn among the roses for real estate in Edmonton”, particularly in the downtown area.
The Edmonton Downtown Business Association predicted that most workers would be back in the office by July, but reports from Colliers and NAI Commercial both indicate that the return has not happened as quickly as expected.
“The employee mindset is that they really prefer at least part of their work life to be remote, and I think the numbers reflect that,” said Chad Snow, president of NAI Commercial.
Jeff Simkin, senior vice president of CRBE in Edmonton, said there is a correlation between the size of companies and whether or not they offer hybrid work arrangements.
Simkin said the city’s suburban market, which has been relatively strong, is characterized primarily by local and regional tenants.
“Downtown has a higher concentration of domestic and global tenants, and many of these businesses have implemented a hybrid model,” he said.
Edmonton is part of the national trend
Edmonton is not the only Canadian city where the suburban office market surpasses the downtown market.
The CRBE’s latest national report on office markets found that city centers are increasingly lagging behind suburban markets.
“This is the second consecutive quarter that suburbs have posted a lower national vacancy rate compared to downtowns, unheard of in the Canadian office market,” the report said.
According to CRBE data, the downtown vacancy rate was higher than the suburban vacancy rate in Edmonton, Winnipeg, Halifax, London, Ottawa, Vancouver, Waterloo Region and Calgary.
Some market watchers predict that the vacancy rate will continue to rise in downtown Edmonton as employers who may have been locked into 3-5 year leases during the pandemic come to the end of those contracts.
Simkin said he expects more national tenants to implement a hybrid working model, reducing their downtown footprint, and some financial institutions may begin subletting space in the downtown core. .
Others see hopeful signs that the vacancy rate could move in the other direction.
“I think we’re very close to the bottom of the market,” said Taylor Riar, senior team partner at Colliers’ Edmonton office.
“We start turning the corner based on the level of activity we see,” he said.
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