TELEWORKING AN URBAN RISK

The pandemic appears to be behind us, but some of its consequences will persist. One of them is the shift toward virtual work.

Technology is a tool for work, but it is not without its negative effects. We will leave it to others to discuss the merits and limitations of remote work (teleworking), as regards human resources. Here we want to highlight its impact on the urban fabric, an important issue to raise at a time when public policy makers are facing demands from their employees for a "right to telework".

At the beginning of the pandemic, working from home emptied offices. Today hybrid work is the norm. As a result, building vacancy rates have increased. The effect is that lower property values of office space will result in lower property taxes being paid into municipal coffers. Given the loss of office traffic, nearby businesses also experienced a decline. Another consequence of virtual work was the deterioration of commercial services, which undermines the economic attractiveness of major centres.

To replace that lost clientele, a consensus quickly emerged to increase the number of residents in urban centres in order to sustain economic vitality. Unfortunately, the remote work option is pushing in the opposite direction, providing a major boost to urban sprawl.

Governments remind us daily to rethink our lifestyles in light of the climate crisis, urging us (with good reason) to densify, but now remote work is impeding that transition.

Public Sector Negotiations

The union's demand in negotiating federal public service working conditions makes the right to telework as important as salary demands. While we know that the government will want to control any wage increase, there is concern that it may be interested in allowing more flexibility for virtual work. A quick glance at the federal treasury may show only office space that has been saved, but a closer look reveals a different picture. And the call for caution also applies to the Québec Treasury Board.

Federal and provincial employers have a significant footprint in Gatineau, Québec City and Montréal. Their decisions not to require the presence of their employees in the office will affect the economic vitality of the communities in which they are located for a long time to come. Moreover, given the labour shortage, the choices made will influence the expectations and demands of private sector workers, possibly creating a snowball effect that weakens major employment areas.

In order to offset the drop in revenues resulting from declining property values for downtown commercial buildings, policy makers will be tempted to seek increased contributions from the residential sector. Those who live away from urban centres and believe they are not affected by the current negotiations may be adversely affected by the remote work phenomenon. The effect will be even greater because commercial buildings carry a much higher tax burden than the residential sector.

In addition, there will be financial pressure to build new public infrastructure for transportation, water, schools, etc. for those who telework away from urban centres or in very low density areas. At the same time, the infrastructure that we have already paid for in urban centres will have fewer users, resulting in a net loss of return on our previous contributions.

Then once we individualize workplaces by granting the right to teleworking, an unfortunate consequence will be a surge in urban sprawl. By the time we start to question the coherence and consistency of government calls to reduce the carbon footprint, it will be too late.

Obviously, hybrid work is here to stay, and admittedly its consequences are less dramatic than if the right to generalized telework were conceded. But that does not mean that we can ignore the effects already observed.

We believe that governments should be concerned about our urban centres. For example, they should promote densification by reducing fees and charges and supporting the renovation or transformation of sectors with potential for residential development. That would ensure economic vitality and maximize the use of already paid-for infrastructure. It would also help curtail urban sprawl.

New Director Of The Idu

Editor's note - The publication of this issue of Commercial Real Estate Magazine coincides with the departure of Jean-Marc Fournier, who is retiring on June 6, and the appointment of the new director of the IDU, Isabelle Melançon. We would like to take this opportunity to wish Mr. Fournier a happy and active retirement, and to welcome Ms. Melançon to the commercial real estate and urban development sector.

Before joining the Institute for Urban Development, Isabelle Melançon was director of communications and institutional relations at Société de développement des entreprises culturelles (SODEC) from 2008 to 2014, and chief of staff and member of the National Assembly from 2016 to 2022. She was also Minister of the Environment, Sustainable Development and Climate Change.