While the onset of remote work during the early 2020s brought widespread attention to empty office towers, commercial property observers note that a substantial portion of the market represents corporations that have been quietly consolidating their real estate holdings for over a decade. The pandemic did not create the movement toward leaner, more flexible physical footprints from scratch; rather, it made an existing trajectory far more pronounced, pushing large employers to operationalize long-dormant workplace efficiency strategies across their corporate real estate portfolios.
This transition has fundamentally altered the interior mechanics of the corporate office, particularly through the widespread adoption of unassigned desk policies, commonly referred to as hot-desking or agile seating. Long considered an unconventional approach reserved for boutique consultancies or tech startups, desk-sharing has become the standard operational framework for Canada’s largest and most established institutions. Large domestic financial institutions and prominent multinationals have spent years testing and executing these transitions to optimize their footprint.
Industry analyst Cairns pointed out that major corporate players have spent significant time navigating this shared-desk environment, noting that unassigned seating models are already deeply established across sectors such as Canadian banking. Legacy corporations that make up the upper echelon of the Fortune 500 have steadily trended in this direction for years, evaluating real estate not through the lens of dedicated square footage per individual, but through daily spatial efficiency.
Supporting this transition is a parallel evolution in digital monitoring and workplace management technology. Modern building entry badges, internet access points, and desk-booking platforms now offer corporate management precise, real-time data on employee presence and space utilization. The deployment of this infrastructure provides organizational leaders with an unprecedented understanding of how their office square footage is actually being used day to day.
According to Cairns, companies approach this analytical visibility from distinct angles, observing that organizations can view utilization tracking either through the lens of policing workplace attendance or as a practical necessity for operational management. Tracking metrics offer functional utility for planning essential on-site resources, from daily food services and catering needs to janitorial scheduling, heating, and cooling allocations across corporate campuses.
This heightened scrutiny of physical utilization has established a direct link between an employee’s schedule and their physical working environment. Scott Figler, senior director of research and strategy at commercial real estate advisory firm JLL, highlighted that spatial utilization has emerged as an essential deciding factor for facilities teams determining office layouts. Under current operating models implemented by a growing number of corporate employers, an employee must spend a designated portion of the week on-site—frequently at least three days—in order to justify having a permanently assigned desk. Workers who spend fewer days in the building are instead routed toward flexible, unassigned desks that must be booked or claimed on an as-needed basis.
However, this transition toward unassigned seating is far from uniform across the broader commercial ecosystem. Smaller organizations and distinct professional sectors continue to push back against the generalized adoption of hot-desking. Ross Moore, a Vancouver-based senior vice president and managing director specializing in tenant representation, observed that many small-to-medium-sized commercial tenants actively choose leasing configurations that preserve dedicated seating.
Moore explained that workplace preferences remain heavily dependent on the specific industry involved. Specialized fields, legal practices, boutique financial advisory firms, and other professional environments frequently retain a traditional work culture where employees require dedicated file storage, individual privacy, and continuous, predictable access to the same workstation every business day. For these smaller tenants, maintaining dedicated personal desks remains a primary corporate objective when negotiating commercial lease contracts.
These evolving workplace behaviors have produced a notable bifurcation in the broader leasing market, particularly within central commercial districts. In downtown Toronto, leasing conditions have tightened dramatically for high-end properties, despite broader narratives surrounding historically elevated metropolitan vacancy rates. Figler noted that vacancy rates in Toronto have fallen below five per cent within premier AAA "trophy buildings," illustrating an aggressive flight to quality by major corporate occupiers looking to secure top-tier properties.
Following a period marked by muted leasing demand, market activity has rebounded strongly toward the top end of the sector, making it nearly impossible for tenants to secure available space within the financial core’s most prestigious towers. This scarcity at the very top of the market has triggered a measurable spillover effect, as major organizations unable to find suitable space in premier trophy assets are compelled to evaluate and compete for upper-tier secondary office properties located throughout the downtown core.
Despite this concentration of leasing demand at the top of the market, the commercial real estate sector faces an economic disconnect that prevents developers from breaking ground on new high-rise towers. Market rental rates have not escalated sufficiently to offset rising construction costs, financing rates, and project overhead. Figler noted that office rents remain roughly 25 per cent below the threshold required to financially justify the development and construction of a new commercial office tower.
Because newly built office towers remain economically unviable for the immediate future, market dynamics have created a compelling financial incentive for real estate investors and property owners to modernize older, well-positioned properties. Instead of undertaking high-cost ground-up construction, institutional capital is pivoting toward acquiring existing office buildings situated in prime commercial nodes and carrying out extensive capital renovation programs. Figler projected that the commercial market over the next one to two years will be characterized by institutional acquisitions targeting existing assets that possess the location and structural potential to compete directly with high-end trophy inventory once modernized.
For institutional property owners and asset management firms, this operational landscape represents an entirely new way of operating in the commercial leasing sector. At GWL Realty Advisors, a wholly owned subsidiary of The Canada Life Assurance Company overseeing more than $18 billion in assets under management—over a quarter of which is invested directly in the commercial office sector—executives see clear opportunities to adapt properties to meet these evolving corporate requirements.
Devan Sloan, vice-president of asset management at GWL Realty Advisors, noted that prior to the pandemic, commercial landlords rarely had to deliberate over how to actively entice workers into their office buildings. During that earlier era, premier office portfolios, including GWL’s extensive commercial holdings, operated with vacancy rates hovering below two per cent, creating a landlord-favorable environment where space leased reliably without the need for extensive hospitality-inspired attractions.
Today, the operational focus has transformed completely toward establishing what Sloan described as a distinct "centre of gravity" within the office building—an environment engaging and well-equipped enough that workers actively choose to commute into the physical property. Landlords are no longer merely leasing raw corporate square footage; they are curating a hospitality-oriented destination designed to support tenants in their internal return-to-office efforts.
Sloan explained that executing this strategy requires fundamental physical and experiential modifications to office assets. For modern property owners, this involves commissioning sweeping design overhauls of main entrance lobbies or introducing high-profile tenant conveniences, including on-site dining partnerships featuring Michelin-starred restaurants, designed to elevate properties above standard commercial market offerings. In their own redevelopment efforts, rather than relying strictly on standard commercial interior designers, GWL engaged design talent experienced in luxury hospitality, including the designer behind the Four Seasons, to impart a luxury hotel ambiance into the commercial corporate setting.
Corporate employers have shifted their lease selection criteria to reflect these heightened workplace demands. Sloan observed that tenant site-selection teams have abandoned historic leasing habits that prioritized executive convenience over general workforce accessibility. Decades ago, corporate office relocations were frequently influenced by proximity to the chief executive’s personal residence. Today, corporate site-selection processes routinely involve Human Resources executives representing the daily preferences, transit concerns, and functional workspace expectations of average employees. Prospective tenants look closely for secondary amenities, transit connections, on-site services, and physical environmental details that human resources leadership can actively highlight to internal staff to encourage in-person office attendance.
Despite major landlord capital investments, upgraded building finishes, and high-end hospitality services, efforts to draw employees back into the workplace face substantial resistance across multiple employment sectors. A significant segment of the modern workforce remains skeptical of mandatory return-to-office directives, viewing blanket requirements as an unwelcome rollback of workplace flexibility.
The ongoing friction is particularly acute within the public sector, where labor organizations have mounted organized pushbacks against mandated office quotas. The Public Service Alliance of Canada (PSAC), which represents tens of thousands of federal public service workers across the country, has maintained continuous opposition to federal employer mandates requiring staff to work on-site for a minimum of four days per week.
PSAC national president Sharon Desousa criticized the employer’s top-down mandate, arguing that a standardized, one-size-fits-all policy does not reflect the operational reality on the ground. Desousa emphasized that federal departments currently lack adequate physical capacity, pointing out that in many government workplaces there are simply not enough desks, insufficient physical square footage, and no comprehensive operational plan in place to support the scale of workers being ordered back into the office.