London Inc. Weekly

London Inc. Weekly: A summary of regional business news from the past week

Weekly Regional Business Intelligence

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Written by Kieran Delamont, Associate Editor, London Inc.

Downtown office woes deepen

London’s downtown office vacancy rate rose again last year, reaching 31.7 per cent at the end of 2024, up from a vacancy rate of 28.5 per cent in 2023, according to the latest figures released by CBRE. And unfortunately, it appears set to worsen this year: the commercial real estate brokerage estimates that by the end of 2025, 33 per cent ― one in three ― of all offices downtown will be vacant. “We’re still within a five-year cycle of when things got bad in 2020,” CBRE realtor Greg Harris told The London Free Press. “Businesses have five- to 10-year leases and tenants are still looking to right-size their spaces that will come due in 2025.” Underlying the growing vacancy rate is partly a flight to the suburbs, with smaller companies finding it more convenient to head to cheaper, and often newer, office space. “We’re not going to sit by and do nothing,” Mayor Josh Morgan told CBC News London. “We know we have a challenge. We know we have a legacy problem and we’re going to address it. But I’m going to be frank: it will take time.”

The upshot: The city still seems to be hopeful that what it is doing already will eventually pay off. Morgan said he expects interest to pick up for more office-to-residential conversion projects, though those have been slow to materialize (in many cases, office buildings are not compatible with the spatial configuration for housing, or the office conversion can cost more than demolition and rebuilding from scratch). CBRE, for their part, is spinning it as a period of “adaptation,” saying that “with the right efforts, the future of the market holds promise for growth and revitalization.” But still, the vacancy rate keeps growing even as efforts to stop the bleeding have been ongoing for several years now, and the housing conversion plan has been very slow to launch. All of which makes us wonder if it’s time for a complete rethink of the strategy at city hall.

Read more: BMO Centre

Survey sheds light on health of London’s golf industry

If soccer’s not your thing, another sport that is humming along in London is golf, according to the 2024 London & Area Golf Survey, which was recently released by local golf publisher Jeffrey Reed, who runs LondonOntarioGolf.com. “Since the pandemic, London and area golf clubs have collectively announced that they have experienced unprecedented traffic in tee times, as golf has provided even the most casual golfer with a safe, inclusive outdoor activity,” said Reed. “Local courses also report that new golfers introduced to the game during the pandemic continue to golf ― proving once again that golf is a game for a lifetime.” London’s biggest asset? An abundance of golf courses ― there are 125 public and private courses in Southwestern Ontario, plus a couple dozen practice facilities. “The golf industry contributes tens of millions of dollars annually to the local economy, including spending at golf clubs, retail sales and charity golf fundraising,” Reed said.

The upshot: Some of the golf-specific insights gleaned from the survey are worth highlighting. It is still an older person’s game in London, with more than half of all golfers over the age of 45 and only around 10 per cent under the age of 34. Ninety per cent of survey respondents called themselves avid golfers (as opposed to casual) and 60 per cent said they play more than 40 rounds of golf per year. But the business community staple ― the charity golf tournament ― is in decline, Reed noted. “There were approximately 350 charity golf events of all sizes in London and area prior to the Covid-19 pandemic, while in 2024 there were approximately 225,” the survey found. “Even some of the larger local charity golf committees report they are investigating other ways to raise funds in place of golf.” And another split within the golf community is whether London should do more to market itself as a golf destination ― it was an even 50-50 split on that question.

Read more: London Inc.

London residential rents decline year-over-year for first time since pandemic

After multiple years of double-digit increases, residential rents in London dropped last year as demand softened and new supply helped inject some slack into the rental market, according to the latest Rentals.ca market snapshot. Rents for a one-bedroom apartment ended the year 5.1 per cent lower than it started (to $1,760), while rent for a two-bedroom unit dropped 4.1 per cent (to $2,161), contributing to an overall drop of four per cent. “Rent prices have gone down because there’s been new supply, there has been a recent slowdown in population growth and there’s also been a weakening economy,” said Rentals.ca’s Giacomo Ladas. “When all of that happens, prices go down. It’s a good sign for renters who are looking to get into the market because there might be some temporary relief.” London’s rental market declined even more than the national market, which saw a decrease of 3.2 per cent compared to the end of 2023.

The upshot: Let’s not get out too far over our skis here ― a four per cent drop in 2024 follows an 8.6 per cent increase in 2023, and a 12.1 per cent increase in 2022 ― but it’s definitely good news for those in search of new rental digs. Scratch under the surface and there are some interesting trends, though. Nationally, rents are declining quickest in the largest, most expensive markets, but continuing to rise in markets historically considered more affordable ― something Rentals.ca interprets as evidence that people are still fleeing high cost-of-living cities in favour of markets that are, for now, a bit more affordable. (The Halifax example is a good one: long considered a budget city, it is still seeing double-digit rent increases year-over-year.) “I think what’s going to happen is a levelling off in this country,” Ladas told The London Free Press. “The most expensive markets are going to continue to see rents go down, and areas that have a little bit more favourable rent prices, I think demand is going to be pretty high in those spots.”

Read more: Rentals.ca | London Free Press

Uber sues city over trip fee increase

Uber is suing the City of London over municipal fees tacked on to each ride. Uber is objecting to the per-trip fee that the city collects ― in particular, it objects to the jump to the fee that city council approved in October that saw the per-trip fee increase to 50 cents per ride on January 1. Uber is arguing that this constitutes a hidden tax, which is beyond the city’s jurisdiction. “Increases to per-trip fees only mean higher prices for riders, which results in lower demand and less earning opportunities for drivers in London,” said Uber Canada spokesperson Keerthana Rang. “We are hopeful that this can be resolved with the city, but we needed to file with the courts by November 28, 2024.”

The upshot: It’s not the first time Uber has taken a Canadian city to court ― notably, it is suing the City of Toronto over a cap to the number of ridesharing licenses available. It seems to be the first time, however, that the ride-sharing giant has taken a Canadian city to court over the per-ride fees. Those fees were generally introduced in a number of markets as municipalities sought to regulate Uber in the first place; small per-ride taxes were generally seen as the simplest way to cover costs. London has increased its fees considerably over the years. In 2017 the cost was $0.11 per ride, and it has risen all the way up to $0.50 this year, on top of a $51,000 annual fee. The city hasn’t yet responded to the claims in court.

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