Increase in Federal workforce having little impact on Ottawa’s vacancy rate
Increase in number of Federal workforce having little impact on Ottawa’s vacancy rate
Increase in number of Federal workforce having little impact on Ottawa’s vacancy rate
- Over the past five years, federal government employment in the National Capital has steadily increased by 22% -- from 231,000 to 282,000 employees. Over the same period, office vacancy has increased from as low as 6.3% in Q1 2020, to a peak of 10.0% in Q3 2023, before stabilizing around 9.4%.
- Public sector hybrid work arrangements and government downsizing of older office spaces have weakened office demand. Growth in number of jobs did not translate into positive absorption – in fact absorption was negative in Q2 at -41,595 and Q3 at -41,858. However, positive absorption in Q4 (189,296), seems to coincide with firmer RTO policies for both public and private sectors.
- Office occupancy policies in the Federal government have more impact on office demand in Ottawa than net job creation. As public sector workers gradually to return to offices to meet the three-day requirement announced in September 2024, we might expect a reduction in vacancy rates, which could positively impact Ottawa’s downtown core. However, RTO is not applied to the letter in all agencies, which could delay the downtown office market recovery.
April 14, 2025