Will workers return to downtown Canton offices?
CANTON  The lobby of the Huntington Plaza is cool, still and nearly silent on a hot, muggy Wednesday morning in downtown Canton. Not many people are around. From her spot behind the counter at Hazel & Rye Artisan Baking Co. in the lobby, Emily Welk has noticed. It is not like last spring when "everything completely died" in downtown, but the bakery and cafe owner said "it's been quiet in this building." Most of her customers now are from the county building across 2nd Street or from Stark County Job & Family Services rather than the bankers and accountants who once roamed the halls of the 11-story concrete and glass tower at 220 Market St.  Bill Stevens, a first vice president at Colliers in Cleveland who is the listing agent for Huntington Plaza, confirmed that most of the building's tenants have not returned to in-person work, including many Huntington Bank employees. The situation at Huntington is indicative of a wider trend. Several downtown companies' employees are still working from home, and many firms have not decided when or if they will be back in the office, raising concerns that more office buildings in Canton's downtown could end up quieter not just temporarily, but for the long term. Vacancy rate rises in downtown Canton  The Canton market, which includes more than just downtown, has about 13.5 million square feet of office space, according to data collected by CoStar, a commercial real estate research firm. The company estimates that 230,000 square feet of office space in Canton has been vacated and returned to the market since the beginning of 2020. The vacancy rate has gone up from 5.7% before the pandemic to 8.1% now  about in line with the trend nationwide. The national average has risen from 9.8% to 12.3%. Canton has lower vacancy than the country overall because there has been so little new office construction in the city for several decades, said Elizabeth Ptacek, CoStars director of market analytics for Ohio. For comparison, Akron vacancies rose 2% over the same period to 8.3%, and about half a million square feet of office space went back on the market. We think the worst is behind us, but there will continue to be shrinking footprints and space givebacks, Ptacek said. CoStars modeling predicts that vacancy will continue to inch upward as leases come up for renegotiation, though that trend could reverse if the broader economy stays hot into 2022. However, Ptacek warns that there is too much uncertainty right now to make confident predictions. Much of the market is protected by long leases that have yet to expire. Stevens, the listing agent for Huntington Plaza, has heard prospective clients cut their space needs by a quarter or more, but he said many of his current tenants have not asked for cuts and their leases are not set to expire soon. Shared desks, hybrid schedules send accountants to suburbs  One of the Huntington Plaza leases that did expire belonged to the accounting firm Hall, Kistler & Company LLP. The company announced last month that they would decamp from the seventh floor of Huntington Plaza for offices in Jackson Townships Belden Village. In an email, John Skakun, a partner, said the company's shift to remote work during the pandemic was seamless and an internal survey of employees showed a strong preference for a hybrid model going forward. Greg Luntz, a real estate agent at North Canton-based NAI Spring, which is the listing agency for a variety of downtown offices, said that many firms had the same realization that Hall, Kistler & Company did. Luntz does not expect an abandonment of office space, but as leases come up for renewal, tenants may reduce their office footprint while keeping enough space for employees to come in on a hybrid schedule and share desks. In his recent lease renewal negotiations, some companies are cutting space needs by about a third. Youre going to see some desire to have office work return to an office, he said. That doesnt mean Monday through Friday anymore though.  At Hall, Kistler & Company, Skakun said that many employees will share workspaces and rotate one week in the office, one week remote. The new office space is 30% smaller than the the Huntington Plaza office, he said. Implications for the income tax  What is happening in Huntington Plaza, the Chase Tower and the Courtyard Centre is weighing on the occupants of another downtown office tower: City Hall. "We're losing sleep over it," said Michael McEnaney, the city's chief deputy treasurer said. Tucked in the state budget the governor signed on July 1 was a provision that means employees working from home can receive refunds for the Canton's 2.5% city income tax for the days they worked from home in 2021, and, starting in 2022, employers no longer need to withhold that money. For example, an office worker making $50,000 a year who starts working from home three times a week would save $750 a year, McEnaney said. McEnaney said the city is not worried about losing its largest withholders  hospitals and the school system  but he is concerned the savings will encourage office workers to stay in the suburbs. Terry Coyne, a Cleveland-based vice chairman at Newmark, a real estate services company, said the income tax, which the city increased in 2018, is one of the long-term factors that have pushed firms toward the suburbs for years before the pandemic along with parking and occasionally the perception, which he himself does not believe, that downtown is unsafe. Those traditional factors may still be driving flight from downtown, rather than just a remote work revolution. The choice to stay  Though the CoStar data show businesses are ditching offices faster than before, it also shows that the vast majority of Canton tenants are staying put. The law firm Plakas Mannos LLP is one of them. They left Huntington Plaza in late 2019, but stayed downtown at the Millennium Center. Lee Plakas, a managing partner, called the lure of remote work fools gold for law firms that specialize in litigation. We learned as the rest of the world learned that some things can be done more effectively or more efficiently remotely, he said, but trial attorneys need to meet with clients and witnesses face-to-face, train new attorneys in-person and have quick access to the courthouse, which remains the crucible of the law. Plakas added that the firm supports the revitalization of downtown and that means keeping their offices there. Indeed, many of the firms that remain in downtown office buildings, especially the Chase Tower, are litigators. The pandemic changed the office preferences of those who are keeping their offices as well. I think the modern office now after the pandemic is just going to have to look a little bit different, said Kelly Sober, the director of operations at NAI Spring. Hybrid schedules mean offices will be more collaboration oriented and need more and larger meeting rooms; health conscious employees want higher cubicle walls rather than open offices, she said. Fewer passersby but more pastries  Analysts and Canton Realtors say fewer office employees is not cataclysmic for downtown. Sober said residential development, Centennial Plaza, and redevelopment of offices for retail, like the Canton Brewing Co., show downtown is headed in the right direction despite the pandemic. I think overall the outlook is positive even though there might not be as many employees in seats in office buildings than there were, she said. Back in Huntington Plaza's lobby, Welk shares some of that optimism. Even though there are fewer people walking past her display cases filled with chocolate chip cookies, s'more brownies and lemon squares on their way to the elevators these days, Hazel & Rye is "way busier" and has more employees than before the pandemic. When the caf closed in the spring, Welk pivoted to online bakery sales. They took off. And still are. When old ways of doing business were disrupted, she adapted. The hope is that downtown will do the same.