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Home Economic Prosperity

Return-to-office mandates may not be the solution to downtown struggles that Canadian cities are banking on

Alexander WrayJamie SeabrookJason GillilandbyAlexander Wray,Jamie Seabrookand1 others
October 7, 2024
in Economic Prosperity
Reading Time: 9 mins read
A A
Return-to-office mandates may not be the solution to downtown struggles that Canadian cities are banking on
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In recent months, many Canadian employers in both the public and private sectors have implemented return-to-office mandates, requiring workers that transitioned to remote or hybrid work during the COVID-19 pandemic to work in-person again.

Employers are justifying these mandates by arguing they improve productivity, build more collaborative teams and improve mentorship for junior employees.

Employers are not the only group ecstatic about these mandates. Municipalities and business owners are also expressing hope that the presence of office workers will spin off into greater consumer spending at restaurants and other businesses near office buildings. The expectation is that office workers will once again start spending money on coffee, lunch or after-work beverages.

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In 2022, the mayor of Ottawa partially blamed the downtown core’s economic struggles on the fact that federal public service workers were still largely working remotely. Federal workers have since been mandated to return to work in-person three days a week in late fall.

The Canadian Federation of Independent Business similarly criticized the slow return to offices as a leading factor behind why small and medium-size businesses, especially restaurants and bars, are facing challenges in downtown areas.

Insight into restaurant success

During the pandemic, there were predictions that more than half of Canada’s independent restaurants would fail as part of their customer base — office workers — shifted to working from home.

Our recent study investigated which operational, demographic and land use factors affected restaurant survival during the first year of the pandemic in London, Ont.

We found no significant differences between restaurants that failed and restaurants that survived based on proximity to office uses. Instead, operational decisions made by restaurants individually were much more predictive of their survival than any geographic factor, including the presence of offices.

A consistent façade of two-storey buildings on Richmond Street in London, Ontario, Canada housing multiple restaurants. A person walks by wearing a mask, along with a young family not far behind. A large sign hangs in one of the ground floor windows advertising delivery and takeout from Garlic’s restaurant.
Restaurants are seen along Richmond Street in downtown London, Ontario, in June 2021. (Alexander Wray), CC BY-NC-SA

We found that restaurants located in areas receiving more CERB (Canadian Emergency Response Benefit) payments, and with a higher density of entertainment venues around them, were less likely to survive.

Restaurants that adapted by offering pickup and delivery options were more likely to survive, though only for those that did their own delivery in-house rather than relying on platforms like UberEats and SkipTheDishes. Restaurants that had drive-thrus, held liquor licenses, or had been established for more than five years were more likely to survive. These older, more established restaurants were likely more resilient because of financial stability and customer loyalty.

Table-service restaurants fared better than fast food outlets, likely because they could offer large patio dining spaces during the summer. Restaurants with liquor licenses substantially benefited, especially after a regulatory change by the Ontario government that allowed alcohol sales with takeout and delivery — a first for the province.

In short, restaurant success was driven more by individual business decisions rather than being in a specific location. People working remotely instead of in the office did not significantly affect restaurant survival during the first year of the pandemic.

Downtown struggles

As Canadian downtowns look to recover, many face ongoing challenges. Activity levels are down by about 20 per cent from pre-pandemic levels in many places, lagging behind many similarly sized downtowns in the United States.

This downturn has been partially attributed to a combination of higher office building vacancies and fewer workers downtown. For the first time, downtown office vacancy rates have exceeded suburban rates in the Greater Toronto Area. There has also been tremendous housing growth within many downtown cores.

A sign that says 'Please help the homeless: lower the rents' is seen on a tree beside a group of tends sent up in a city park
A sign advocating for support for the homeless is seen through a fenced-in homeless encampment in Victoria Park in Halifax’s downtown on March 4, 2024. THE CANADIAN PRESS/Darren Calabrese

At the same time, downtowns have become a highly visible focal point of Canada’s growing addictions, mental health and housing crises. The pandemic fully revealed the deeper social, economic and health challenges happening in Canadian society.

While violent incidents are rare, the social incivilities and disorder on display — public urination and defecation, open drug use, visible tents and property crime — contributes to a perception that Canadian downtowns are unsafe. This perception, whether accurate or not, has an impact on the willingness of people to engage with their downtowns.

A way forward

The damage to the reputation of Canada’s downtowns has been done. Downtown London now has the highest office vacancy rate in the country. The Workplace Safety Insurance Board of Ontario, for instance, recently chose to consolidate its offices in the outskirts of London, rather than downtown.

Many people now elect to spend their time and money in areas that have embraced the “experience economy.” These are places that provide highly manicured entertainment and shopping destinations, with restaurants being the bedrock of enabling high quality experiences in these areas.

People sitting around a patio table drinking beer and wine
People enjoy drinks and friends on outdoor patios during the COVID-19 pandemic in downtown Toronto in June 2021. THE CANADIAN PRESS/Nathan Denette

Foot traffic is at an all-time high in suburban shopping centres. The downtowns of cities that are widely known as global tourist destinations — Las Vegas, Miami and Nashville — have activity levels close to or higher than their pre-pandemic levels.

These are places that are developing highly attractive economies that provide people with the safe, fun and exciting experiences they are looking for locally and internationally. Instead of trying to force unwilling workers back to the office, Canadian cities should instead focus on developing downtowns that people genuinely want to visit and experience.

One potential way to do this is to provide wrap-around support services and direct pathways to stable housing across the entire community, as the City of London has done. By spreading care and outreach services across the entire city, rather than concentrating them exclusively in downtown areas, the negative effects from Canada’s homelessness crisis can be reduced on urban cores.

This type of strategy will direct those who need help away from downtowns, and may even permanently lift them out of poverty. In turn, Canadian downtowns can return to being places for everyone to shop, eat, relax, and work in comfort.

Source: The Conversation
Tags: DowntownEconomic DevelopmentHousing AffordabilityPolicingPublic Health
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Alexander Wray

Alexander Wray

Alexander “AJ” Wray is a Canada Graduate Scholar, Salzburg Global Seminar fellow, and Doctoral Candidate in Geography at Western University. AJ uses geographic information science and policy analysis to resolve the complex problems that face Canadian municipalities. AJ received his Masters in Geography from Western in 2020, and holds an undergraduate degree in planning and environmental assessment from the University of Waterloo. In the community, he is the President of the Town and Gown Association of Ontario - the trusted, coordinated voice for post-secondary students, post-secondary institutions, municipalities, first responders, residents, and property managers in Ontario communities that host post-secondary institutions. TGAO shares information, facilitates connections, and mediates relationships among our diverse group of stakeholders to promote vibrant cohesive communities.

Jamie Seabrook

Jamie Seabrook

Dr. Jamie Seabrook is a Professor in the Department of Epidemiology and Biostatistics, Paediatrics, and the Brescia School of Food and Nutritional Sciences at Western University. Dr. Seabrook is also a Scientist with Children’s Health Research Institute and Lawson Health Research Institute, and a Faculty Associate of the Human Environments Analysis Laboratory. Dr. Seabrook’s research focuses on the social determinants of child health disparities and adolescent substance use. In 2019, Dr. Seabrook received the Award for Excellence in Research at Brescia University College.

Jason Gilliland

Jason Gilliland

Dr. Jason Gilliland is Director of the Urban Development Program and a Professor in the Departments of Geography & Environment, Paediatrics, Health Studies, and Epidemiology & Biostatistics at Western University, Canada. He is also a Scientist with the Children’s Health Research Institute and Lawson Health Research Institute, two of Canada’s leading hospital-based research institutes. He is also Director of the Human Environments Analysis Laboratory (HEAL), an award-winning, multidisciplinary research and training centre which develops and connects highly skilled researchers to create, disseminate, and mobilize knowledge for making healthy, thriving communities.

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