Ottawa has set a target to halve its portfolio over the next decade, but has faced difficulties reaching it.Adrian Wyld/The Canadian Press
The federal government has made little progress in getting rid of underused office space and must do more to halve its portfolio over the next decade, according to a report from Auditor-General Karen Hogan.
Prior to the COVID-19 pandemic and shift to remote work, the federal government concluded that half of its six million square metres of office space was not fully used and estimated it could cut $3.9-billion in maintenance and operating costs over a decade by getting rid of some of that space.
But Public Services and Procurement Canada, the department in charge of managing federal offices, has faced difficulties in shrinking its portfolio, according to the Auditor-General’s report released Tuesday. The department did not have funding to break and terminate leases, and it did not get co-operation from many of the largest federal tenants.
As a result, its office space was only cut to 5.9-million square metres in the most recent fiscal year from six million in 2019, which is a 1.7-per-cent reduction.
According to the report, 15 of the government’s largest tenants had yet to agree to decrease their space. Those tenants represent 45 per cent of the government’s total office space.
“This is a risk to the timely and full implementation of the reduction plan and can delay or reduce the associated savings,” the report said.
Ms. Hogan found that the vast majority of those large tenants did not have financial incentives to minimize their office space.
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Although the Public Services Department has sped up the time it takes to get rid of a property to three years from as long as eight years, the Auditor-General said more work needs to be done to halve the government’s office space.
The department’s latest forecast shows that the office portfolio will shrink by 33 per cent by 2034.
Ottawa’s initial assessment of its underused office space was unveiled in 2017, well before federal office workers revolted against returning to the physical office five days a week after the pandemic eased. That means that there could be even more underutilized office space.
More recently, the Liberal government has announced plans to put homes on every possible piece of federally owned land.
The department has been asked to prioritize properties that could be used for housing. But the Auditor-General’s report said this could slow down the process and lead to higher maintenance and operating costs if the department must delay getting rid of properties not suitable for housing.
“The longer the disposal process, the more it costs the government to maintain the buildings slated for disposal,” the report said.
So far, the federal government has identified 91 properties that it wants to divest. That includes land and office buildings in the Ottawa area along with office properties in Winnipeg and Saskatoon, according to its property disposal website.
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“They are in a position to accelerate the reduction in underused office space and increase housing,” said Duanne Render, senior associate with Gensler, an architectural firm that specializes in converting office buildings to housing.
Gensler has estimated that up to 45 per cent of the office buildings owned and leased by the federal government could be turned into apartments. Mr. Render said in an interview that some of the properties on the government’s disposal list are prime locations for such a conversion.
The Auditor-General made four main recommendations to the procurement department, including the need for more publicly available data such as total proceeds from sale of a building, the market value of each property and those remaining in the portfolio. The department agreed with the recommendations.