Government to Sell Off Surplus Properties Amid 40% Office Underuse

Pedestrians cross Elgin Street in view of Parliament Hill in Ottawa in a file photo. (The Canadian Press/Sean Kilpatrick)

Public Services and Procurement Canada (PSPC), which is in charge of the federal government’s 6.2 million square metres of real property, says nearly 40 percent of its office spaces are “underutilized” and it is looking to sell these properties.

In a June 1 briefing note, former PSPC minister Helena Jaczek revealed that a detailed pre-pandemic review found 40 percent of government office space was underutilized, as first reported by Blacklock’s Reporter.

PSPC anticipates the underutilization trend to persist, stating in the briefing note, “Given the current reality of evolving patterns of work, we are confident in our ability to further reduce our portfolio by up to 50%.”

“My department is working with client departments and agencies to help them identify their future office needs as we continue our transition to a hybrid work model with greater use of unassigned office space and interdepartmental shared space,” Ms. Jaczek said.

“Our plans also include the disposal of surplus and underutilized lands and buildings ensuring that all surplus properties are assessed for suitability for affordable housing.”

It will take an estimated 10 to 25 years to sell off the surplus federal office portfolios, according to PSPC.

Ms. Jaczek emphasized that her department’s decision aligns with the new hybrid workplace, prompting updates to planning assumptions and investment timelines.

In a 2022 report titled “Evaluation of The Office Portfolio,” the department said annual operation and maintenance cost of the 40 percent unused office spaces amounts to approximately $2.4 billion. “Infrastructure is the second largest expense to the Government of Canada after salary expenses,” said the report.

It said the implementation of a 10-year planning to reduce 40 percent office space “could result in long-term cost savings in the order of $1.15 billion per annum,” citing another study titled “2022 Office Long Term Plan.”

Cabinet has estimated office vacancy rates run as high as 70 percent or more under Treasury Board rules that permit federal employees to work from home half the time, reported Blacklock’s. An Inquiry of Ministry tabled in the House of Commons showed vacancy rates ranged from 40 percent in the Department of Agriculture offices in Ottawa to 80 percent vacancy at a National Film Board office in Winnipeg.

The Treasury Board announced on Dec. 15, 2022, that federal employees may work from home “40 to 60 percent” of their regular schedule.

“We are not going back to the way things used to be,” then-Board President Mona Fortier said at the time. “We are reimagining our workplace.”