Nova Scotia is the latest province to wage war on remote work as governments try to anchor people to big cities. The Government of Nova Scotia (GNS) has ordered thousands of its non-union staff to work out of the office full-time starting next month, even those who haven’t since 2015. The move follows corporate and political pressure across the country to return government staff to the office, and return a premium to big city real estate markets at the expense of smaller, more affordable regions. It may provide a boost to Greater Halifax real estate demand, but it’s likely to amplify the slowdown in the rest of the province.
Nova Scotia Government Orders Staff To Office, Even Long-Time Remote Workers
The Government of Nova Scotia is ordering its non-union staff to the office next month. Starting October 15th, 2024, roughly 3,500 non-union provincial employees will work in the office full time. Notice we didn’t say back to the office? There’s a good reason.
The GNS is one of Canada’s largest pioneers when it comes to a mass adoption of remote work. Remote work was broadly rolled out in 2020, but the province has been running a program called FlexNS that’s allowed remote work since 2015. The project was designed to focus on productivity and output rather than physical hours clocked in an office, and save taxpayers the cost of pricey office space in the process. Many of the workers ordered to work in the office full-time have never been required to work in the office.
Governments Across Canada Are Trying To Prevent Urban Flight
This is a part of a broad trend spreading across Canada called “prescribed minimums.” These are a minimum number of days an employee is required to appear in a major city office, with the Government of Canada (GoC) notably returning its workers back to the office earlier this month. Canada Post’s non-operational staff will also be joining GNS employees in traffic, as they begin their prescribed minimums starting October 15, 2024.
Policymakers often use buzzwords like the plan will “improve collaboration” and “foster community.” Many in the public think people aren’t working unless they’re physically in the office. There’s little-to-no evidence to support either of those points since the plans often don’t care when employees come in and the data shows productivity has actually increased. However, there’s plenty of evidence to show this is about real estate, anchoring employees to big cities and reviving business downtown.
Governments began to send employees to the office almost exclusively after corporate and political pressure. The country’s most expensive real estate markets no longer had people anchored for their careers, and the premium was transferred to smaller, more affordable cities. Can’t have that, can we?
Halifax Downtown Office Woes Started Before 2020
Those looking for vacant space in Downtown Halifax are in luck—there’s a lot of it. Colliers estimates 16.4% of space sits vacant, about 1 in 6 sqft of prime real estate. Interestingly, like the Province’s embrace of remote work, this issue predates the pandemic.
The vacancy rate was similar in 2018, when commercial real estate firm Turner Drake & Partners Ltd warned it may be an unsustainable setup. Back then, the firm warned the appraisal values will fall, and city revenues will need to decline accordingly. Cities are a little more strapped for cash these days.
NS Small Town Boom Is Over, Halifax Recovering Market Share
Various policymakers across Canada have also stated that mandating government workers back to the office is about setting an example. When the pandemic kicked off, it was sold as a “new normal” that workers will be detached from the office. Careers were no longer chained to major cities, and workers could move to more affordable regions. After all, even the government was doing it!
Now that more office places are asking workers to return to the office, demand outside of the city has completely dropped off the map. The share of Nova Scotia home sales outside of the Halifax-Dartmouth region sit at 51% year to date (ytd) in August. Contrast that with the 2022 peak of 62% of sales in the province outside of the HRM.
Most home sellers are likely unaware of the shift since it aligns with rising interest rates. Industry experts have been suggesting rate cuts will revive markets. Though the data shows there’s a big shift in the type of homes people are purchasing. If credit stimulus manages to spark more buying, the odds are towards the Halifax-Dartmouth region, not the rest of the province. Policymakers are hoping to cement that.
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