Public Services and Procurement Canada slow to reduce office space and support affordable housing
Report 3—Current and Future Use of Federal Office Space
Report metadata
- Tabling date:
- Audited entities:
- Public Services and Procurement Canada
- Housing, Infrastructure and Communities Canada
- Treasury Board of Canada Secretariat
- Topics:
- Housing
- Real Property
- Report type
- Auditor General reports
At a glance
In response to its 2017 estimate that half of government office space was not being used to full capacity, in 2019–20, Public Services and Procurement Canada started planning for the disposal of properties it considered could be better used for other purposes. Some of the surplus properties identified as suitable for housing could be used by the Federal Lands Initiative, a program run by the Canada Mortgage and Housing Corporation (CMHC) that aims to use surplus federal properties for the development of affordable, accessible, energy-efficient, and socially inclusive housing.
Public Services and Procurement Canada’s efforts to rightsize federal office space and decrease the associated costs depend on the department having a flexible plan that mitigates evolving risks. We found that, mainly because of a lack of funding since 2019 to implement the original reduction plans, Public Services and Procurement Canada was able to achieve only a slight reduction in office space. The department developed an updated plan maintaining the commitment to reduce office space by 50%, and Budget 2024 provided the department with $1.1 billion over 10 years to do so. However, Public Services and Procurement Canada currently projects that office space reductions will only be 33%. Budget 2024 also instructed Public Services and Procurement Canada to prioritize disposal of properties that can be leveraged for housing. We found that this prioritization could delay the disposal of properties less suitable for housing and risks resulting in an increase in maintenance and operating costs.
We found that between 2021 and 2024, the Treasury Board of Canada Secretariat made good progress in implementing improvements in how real property is managed within the government. However, its ability to lead and support departments and agencies decreased significantly with the dissolution in 2024 of the Centre of Expertise for Real Property, which had been set up in 2021 to support the government in the management of its real property portfolio.
We also found that the CMHC, supported by Housing, Infrastructure and Communities Canada, was on track to meet the Federal Lands Initiative’s initial target to secure commitments by 2027–28 to build 4,000 new housing units. However, the CMHC’s reporting of the number of housing units built lacked clarity. In addition, the initiative did not maximize access to affordable housing for those with the greatest need.
Why we did this audit
- Vacant or underused office space means unnecessary costs for the government.
- A well‑managed portfolio of office space is not only cost effective for Canadian taxpayers but also helps maximize the benefits of the hybrid work environment.
- If well managed, the disposal of surplus federal properties and land identified as not required anymore and that can be disposed of can provide cost savings while also helping to increase housing supply, especially sustainable, accessible, and affordable housing for low‑income families.
Highlights of our recommendations
- Each year, Public Services and Procurement Canada should gather and publicly report more information on its management of office space, including its progress toward the target of 50% reduction, the use of office space, and the occupational density, to enhance transparency and efficiency.
- Public Services and Procurement Canada should work with central agencies and other relevant departments to explore with federal tenants how to reduce the office space they occupy.
- Public Services and Procurement Canada should ensure that its office portfolio reduction plan includes the increased maintenance and operating costs of surplus office buildings that are not prioritized for disposal because they are less suitable for housing.
Key facts and findings
- Public Services and Procurement Canada manages an office space portfolio of about 5.9 million square metres.
- Maintenance and operating costs and payments in lieu of taxes for its office space portfolio were about $2.14 billion in the 2023–24 fiscal year.
- Public Services and Procurement Canada estimated that before the pandemic, 50% of the office space was underused.
- The department estimates the reduction in federal office space will generate savings of approximately $3.9 billion over the next 10 years and ongoing savings of $0.9 billion per year.
- Since 2019, the department achieved only a slight reduction in office space from 6.0 million rentable square metres in 2019–20 to 5.9 million rentable square metres in 2023–24.
- The Federal Lands Initiative, designed to use surplus federal properties for the development of affordable, accessible, energy-efficient, and socially inclusive housing, is on track to meet its target in terms of energy efficiency, accessibility, and number of affordable housing units committed to be built.
- The criterion for affordability used by the initiative is not based on household income; therefore, renters in the lowest-income ranges, whose needs are the greatest for affordable housing, benefit less from the initiative.
Canada needs more sustainable, accessible, and affordable housing to address the housing needs for the most vulnerable Canadians. Sustainable, accessible, and affordable housing promotes social and economic inclusion for individuals and families, reduces the number of households in core housing need and contributes to preventing and reducing chronic homelessness. If well managed, repurposing surplus federal land and buildings can help increase the supply of sustainable, accessible, and affordable housing. The matters examined in this section of the report relate to the United Nations’ Sustainable Development Goal 11 (Sustainable Cities and Communities).
Exhibit highlights
The disposal process and how federal properties are made available for the Federal Lands Initiative Property
Text version
This flowchart shows the 8 steps for disposing of federal real property and making it available for use as housing through the Federal Lands Initiative.
Step 1: Property identification
Federal government departments and Crown corporations identify property that is no longer needed.
Step 2: Due diligence
Federal property owners perform necessary due diligence on the property (for example, Indigenous consultations, environmental and physical condition assessments).
Step 3: Property assessment
Federal property owners determine whether land and building(s) are suitable for use as affordable housing.
Step 4: Property review
The Federal Lands Initiative team reviews evaluated properties and expresses interest in those suitable for conversion to housing. Re‑zoning or pre‑development work may be done at this stage.
Step 5: Property for sale or lease
Suitable property is made available for sale or lease through the Federal Lands Initiative and posted to the Canada Mortgage and Housing Corporation’s National Housing Strategy website.
Step 6: Applications accepted
Housing providers apply to purchase or lease property for an affordable housing project. Proposals are evaluated based on accessibility, affordability, environmental efficiency, and community need.
Step 7: Project selection
A winning application is selected and property is sold or leased at discounted to no cost. Cost is based on the project’s social outcomes, applicant experience, and the project proposed. Agreements are signed to ensure the property is developed and maintained as affordable housing for no less than 25 years or as otherwise specified.
Step 8: Housing is built or renovated
Affordable housing is created or rejuvenated to the benefit of the community.
Source: Adapted from information provided by the Canada Mortgage and Housing Corporation
Federal tenants that responded to the survey indicated they used 1 or more methods to collect information on the use of office space
Text version
This bar chart shows various methods for collecting data on office space use and the number of federal tenants that used 1 or more methods. Overall, most federal tenants used multiple data collection methods, some tenants used only 1 method, some tenants did no monitoring of office space use, and 1 tenant had mandatory physical presence.
Badge swipes
- Total number of federal tenants that counted badge swipes: 39
- Number of federal tenants using this method with other methods: 29
- Number of federal tenants using this method as the sole method: 10
Physical count of the number of employees present
- Total number of federal tenants that physically counted the number of employees present: 32
- Number of federal tenants using this method with other methods: 27
- Number of federal tenants using this method as the sole method: 5
Monitoring of Internet Protocol (IP) addresses
- Total number of federal tenants that monitored IP addresses: 32
- Number of federal tenants using this method with other methods: 22
- Number of federal tenants using this method as the sole method: 10
Office reservation system
- Total number of federal tenants that used the office reservation system: 25
- Number of federal tenants using this method with other methods: 24
- Number of federal tenants using this method as the sole method: 1
Other data collection methods
- Total number of federal tenants that used other methods: 10
- Number of federal tenants using this method with other methods: 5
- Number of federal tenants using this method as the sole method: 5
No monitoring of how often the employees used the space
- Total number of federal tenants that did no monitoring: 5
- Number of federal tenants using this method with other methods: not applicable
- Number of federal tenants using this method as the sole method: not applicable
Not applicable (physical presence mandatory)
- Total number of federal tenants that had mandatory physical presence: 1
- Number of federal tenants using this method with other methods: not applicable
- Number of federal tenants using this method as the sole method: not applicable
Comparison by province of monthly rent linked to 80% of median market rent versus 30% of before‑tax income, 2022 and 2023
Text version
This chart compares 2 ways of determining affordability: either based on income or based on median market rent. (Median market rent refers to the estimated middle price from a range of low to high market rental prices.) When affordability is based on income, less than 30% of before-tax income is considered to be affordable monthly rent. When affordability is based on median market rent, about 80% of median market rent is considered to be affordable monthly rent. Across all of the provinces, the amount of rent that is considered affordable is lower when the calculation is based on income: $735 is considered to be affordable monthly rent when the calculation is based on income compared with $960 when the calculation is based on median market rent.
This chart shows that in every province, the Federal Lands Initiative criteria for affordability (based on median market rent) will produce housing units rented at higher monthly costs than units rented in a price range that Statistics Canada considers affordable for lower‑income earners.
The Federal Lands Initiative’s criteria for affordability was “at least 30% of units must be less than 80% of median market rent, for a minimum of 25 years.” Therefore, if a geographic area has not been identified as being in core housing need, then the median market rent for that area is likely serving higher-income earners more than lower‑income earners.
Information on the territories is not available. Here are the calculations of affordable monthly rent for each province:
In Alberta, the maximum affordable monthly rent based on rent being less than 30% of before‑tax income is $865 compared with $1,056 when monthly rent is about 80% of median market rent.
In British Columbia, the maximum affordable monthly rent based on rent being less than 30% of before‑tax income is $831 compared with $1,260 when monthly rent is about 80% of median market rent.
In Manitoba, the maximum affordable monthly rent based on rent being less than 30% of before‑tax income is $655 compared with $944 when monthly rent is about 80% of median market rent.
In Newfoundland and Labrador, the maximum affordable monthly rent based on rent being less than 30% of before‑tax income is $566 compared with $760 when monthly rent is about 80% of median market rent.
In New Brunswick, the maximum affordable monthly rent based on rent being less than 30% of before‑tax income is $609 compared with $854 when monthly rent is about 80% of median market rent.
In Nova Scotia, the maximum affordable monthly rent based on rent being less than 30% of before‑tax income is $653 compared with $1,082 when monthly rent is about 80% of median market rent.
In Ontario, the maximum affordable monthly rent based on rent being less than 30% of before‑tax income is $746 compared with $1,200 when monthly rent is about 80% of median market rent.
In Prince Edward Island, the maximum affordable monthly rent based on rent being less than 30% of before‑tax income is $700 compared with $760 when monthly rent is about 80% of median market rent.
In Quebec, the maximum affordable monthly rent based on rent being less than 30% of before‑tax income is $695 compared with $751 when monthly rent is about 80% of median market rent.
In Saskatchewan, the maximum affordable monthly rent based on rent being less than 30% of before‑tax income is $664 compared with $940 when monthly rent is about 80% of median market rent.
Source: Based on data published by Statistics Canada and the Canada Mortgage and Housing Corporation
The housing continuum
Text version
This illustration shows the range of housing from homelessness to home ownership.
The housing continuum has the following types of housing:
- No housing, meaning homelessness
- Emergency shelters
- Transitional housing
- Social housing
- Affordable rental housing
- Affordable home ownership
- Market rental housing
- Market home ownership
Source: Adapted from Canada Mortgage and Housing Corporation