Is COVID-19 to blame for the high office vacancy rate in downtown London?

London city council is pushing to get about $300 thousand to help improve the vibrancy of the downtown, which has an office vacancy rate of about 20 per cent.

Office vacancy rate in the core is about 20 per cent

The downtown core has an office vacancy of about 20 per cent. (James Chaarani/CBC)

The city is pushing to get about $300 thousand to help improve the vibrancy of London's downtown, which has an office vacancy rate of about 20 per cent, compared to the national average of approximately 15 per cent. 

A report by city staff points to the pandemic as a major cause, explaining that "commercial real estate is particularly uncertain as tenants consider new and emerging business models." 

But is COVID the only factor? 

Marcello Vecchio doesn't believe that the pandemic is solely to blame for the vacancy issue in the downtown core. (Submitted by Marcello Vecchio)

Marcello Vecchio, a research associate and project coordinator at Western's Human Environments Analysis Laboratory, believes that this high rate is a result of changes in how people work and use offices. However, despite acknowledging that COVID has played a role, he doesn't think that the problem was born just from the pandemic.

"If you look at the vacancy rates from a few years ago, they were still pretty high," Vecchio said. 

The pre-pandemic rate was 16 per cent. 

"London has some issues in the urban core that are, I think, more systematic than COVID 19."

He said these issues are related to things like crime, social issues that haven't been fully addressed and a "lack of transportation infrastructure," explaining that "downtown has a bit of an image issue."

"I think when businesses ask themselves where should we locate in London, they have to find those pros and cons of any location," he said. "Right now, the cons in the downtown are just outweighing the pros of locating somewhere in the more suburban areas."

The city is proposing a plan to help address the high office vacancy in the core. (James Chaarani/CBC)

Vecchio thinks that one way to make the downtown more vibrant as a destination is to bring more residents downtown versus relying on drawing people in from other parts of town to visit.

"We can't be scared of proper and appropriate density in our core areas," he said. "We've seen the struggle for a few decades now where people like London the way it is and sometimes don't want to see it change."

'Light at the end of the tunnel'?

Barbara Maly, the executive director of Downtown London talks, about the "skyscrapers in the sky" as a good sign for population growth. She said that there are about eight thousand people living in the core, which she claimed will go up in a couple of years to more than 11,000 people. 

When it comes to what she called "mainstreet businesses," she said that this year alone, 36 new ones have popped up in the downtown. 

Barbara Maly claims that there's "a light at the end of the tunnel" when it comes to the high vacancy rate downtown. (Submitted by Barbara Maly)

"We're seeing a light at the end of the tunnel, so to speak," Maly explained.

The city is looking to get approval at today's strategic priorities and policy committee meeting to come up with a strategy to tackle the issue. 

If endorsed, the $300, 000 program would begin in January 2022.