When a longtime downtown lunch spot considers leaving, you know office vacancies are dire

There are few places as popular with the downtown London, Ont., office crowd than Nooner's on Clarence Street.

The family-run restaurant has been serving lovingly prepared comfort classics such as chili, sandwiches and meat loaf to office workers for nearly 40 years. But Katrina Wice, who took over from her mother, is now starting to look for a potential way out. 

"We've thought of actually relocating," she said. "The overhead is too big here, we're not filling our dining room anymore. We just don't have the volume like we used to, that we used to depend on."

London, like many cities across North America, saw an exodus from its downtown core during the COVID-19 pandemic. Storefronts emptied, buildings were boarded up and streets became deserted as people stayed home to avoid getting sick. When the threat subsided, many expected office workers to come back.

Business 'never went back'

A lot of workers never returned to their downtown offices, leaving Wice and business owners like her with only a fraction of the customers she used to serve. 

"We've always benefited from the big office buildings. As soon as the pandemic hit, it never went back."

Her experience is evident in the latest office space market report from CBRE Canada. The commercial real estate firm said 26 per cent, or one in four offices, in the core are still vacant since the most anxious days of the COVID-19 pandemic — making London's downtown among the most empty in Canada.

"The vacancy levels are really higher than we've ever seen," said Greg Harris, an associate vice-president with CBRE's London office who said the current office vacancy rate is about nine per cent higher than the city's historical average.

"Yes, it's high," he said. "But it doesn't spell the death of the downtown office." 

Office exodus has stabilized, says commercial realtor

Harris said he believes the latest numbers, which the CBRE report described as "stagnant" for both downtown and the suburbs, are a sign that London's office sector has stabilized three years after the pandemic began sending office workers to work at home in their pyjamas.

Many of the offices still have five to 10 years left on their leases, Harris said, and if they haven't downsized their space requirements already because of modified or hybrid work arrangements, they're waiting to see what the future of work will bring before they make any major moves. 

"There's going to be a wait-and-see period, I think," Harris said, adding he believes the fact the 2021 census identified downtown as one of the fast-growing neighbourhoods in the city in terms of population growth will help local businesses hurting from a lack of foot traffic. 

"Population downtown will help," he said. "Typically, the more active a core gets with foot traffic and population, that should have a benefit." 

Poverty, homelessness act as a deterrent, says broker

With fewer office workers downtown, some argue the core's poverty and drug problems have become more visible and it's certainly a factor that keeps many offices from setting up shop in downtown London. 

"It's a potential safety issue for some companies and their employees," Brent Rudell, the broker of record for Cushman-Wakefield in southwestern Ontario, told CBC News Thursday.

Ruddell said that despite having lots to offer and significant investments by city hall in the last few years on downtown beautification, such as the $16-million renovation of Dundas Place, the neighbourhood's highly visible homelessness, poverty, mental health and drug addiction problems act as a deterrent to economic growth.

"I think they're spending money in the wrong places," he said of the city's recent construction of a flex street along Dundas. "They're building big beautiful new streets for [the] homeless.

"It doesn't solve that issue. Nothing has really changed and it continues to get worse." 

Back at Nooner's, Wice is still weighing her options. Crime, especially break-ins and vandalism, have become a major cost consideration for her restaurant.

Customers tell her a lack of downtown parking downtown and a general feeling of being unsafe are also concerns. It's why she's considering a move to the suburbs.

"I might," she said. "It's scary. I come in through the back door and I go out the back door. I myself don't even go down the street  because I don't feel safe.

"If you're coming down here with your young family, you don't want your children to see the crack smoking on the street."