Commerical Real Estate News
Happy New Year 2020!
Work is an integral part of our life and a good source of happiness; that’s why we wish you personal growth and career advancement, moral satisfaction, warm trustful relationships and wealth in the coming year. Happy New Year!
D.J. McGauley & Associates Inc. is your Office Space Planning, Renovations and Relocation Project Management Company of Choice for the Toronto, GTA and surrounding areas. If a renovation or relocation of your 2,000 – 25,000 sq.ft. office space is in your plans, contact us to arrange a no-obligation site meeting. We guarantee that by the end of that meeting, you will know all that would be required to make your office renovation/relocation project a successful reality.
Call 416-239-1931, email info@djmcgauleyandassociates.com or visit our website for more information and to complete our contact form.
5 Common Mistakes Companies Make When Designing Their Offices
Planning for the correct amount of storage
Understand what you are storing, why you are storing it and make sure it’s not just a catch all place for all the indecisions your staff make. Storage is too often used to conceal clutter. Effective storage creates efficiencies while creating an environment that is both esthetically appealing and practical. Different storage solutions can provide time saving functionality that boosts productivity and frees up space for other office uses.
Getting employee input
The right office design will help make your business run better.
Involve employees in deciding how the space will look and feel. Employees often have insights into what an operation needs and may have that wasn’t obvious before but may prove valuable. Their involvement in decision-making gives them a voice in something meaningful which increases engagement and improves performance.
Talk to your employees and ask how the old space has worked. Which features have been good or bad, and why do they feel that way? Don’t assume the old layout is necessarily the best to help drive business. Also consider letting employees name common areas such as conference rooms. That way, they can put their stamp on the space.
If you have the time and resources, consider setting up some common work areas, each decorated in one of the color schemes most popular among employees. They can then try the different settings to see how they feel about them.
Besides giving employees a voice in the new office’s aesthetics, encourage them to discuss practicalities, too. Ask for a wish list of items for the new space, such as a coffee bar or certain type of storage, which could help make work a better place to be.
Plan for growth
It’s hard to know the future. Often, we are planning to grow, but just how much, how many more staff and what’s the time frame.
When you’re designing your office with growth in mind, it’s important to look at ways in which space can be reconfigured to accommodate differing team sizes.
It’s crucial to incorporate adaptable, flexible spaces into your present office design. These spaces can be used for ad-hoc meetings or general relaxation areas for existing staff but can also be re purposed as more formal workspace when necessary or for events and presentations.
Think carefully about your office furniture too. Once you have invested all your money in your latest technology or spent a fortune on the best talent, it might be tempting to skimp on the furniture budget.
Not enough open and/or private spaces
One of the most significant decisions in developing a company’s culture relates to the division of office space. Open space, division into offices, team-based division, mixed offices, a small or a big kitchen – each one of these decisions will affect the way the company functions.
In theory, an open space office sounds like a great idea – an open atmosphere, accessibility for everyone and, of course, an optimal utilization of space. Most open spaces are usually quite noisy and are not that conducive to actual discussions. Many people are easily distracted by every phone call, joke or noise around them.
Acoustics
New open concept designs are often filled with hard surfaces like polished concrete, open ceilings and lots of glass, that give a wonderful open feeling to spaces. But there is downside – increased noise levels.
When noise enters the workspace, creativity and productivity go out the window. That’s why manufactures of office furniture have thrown themselves into designing elements that limit and absorb excessive noise, creating pleasant workspaces that improve performance. The trend for open-plan designs, particularly in new workspaces, has put sound at the forefront of design.
Another way of combating noise in new open-plan workspaces is by incorporating dividing elements which provide privacy and encourage concentration. There are different wall panels which offer solutions that provide contemporary designs with the possibility of personalization, as well as improving acoustics. From acoustical wall treatments to innovative furniture options there are many innovative solutions to improving the sound levels in any office environment.
D.J. McGauley & Associates Inc. is your Office Space Planning, Renovations and Relocation Project Management Company of Choice for the Toronto, GTA and surrounding areas. If a renovation or relocation of your 2,000 – 25,000 sq.ft. office space is in your plans, contact us to arrange a no-obligation site meeting. We guarantee that by the end of that meeting, you will know all that would be required to make your office renovation/relocation project a successful reality.
Call 416-239-1931, email info@djmcgauleyandassociates.com or visit our website for more information and to complete our contact form.
Oil & Office Real Estate– Is There Hope For Recovery?
At the risk of stating the obvious, the plummeting oil prices in our economy today has had quite an effect in the office real estate industry. Many industrial companies across Canada that are highly dependant on oil have contracted their operations in efforts to slash their costs, giving up valuable assets, including office space. This has led to increased office space vacancies across the country which owners are fighting to not sell or lease out below their market value. Meanwhile, some trust companies are selling off their assets in order to have more liquid funds. Their goal– to purchase properties that they foresee being quite profitable once the market changes. But with all this fluctuation and activity, I dare ask, is there a light at the end of the tunnel for the current office space market?
Well, market history dictates that what goes down eventually goes back up again. In 2008, a global recession caused oil prices to drop to $40 per barrel after being peaked at over $150 per barrel between 2000-2008. Then economic recovery efforts between 2009 and 2014 brought the oil prices back up to $125 per barrel1. Oil prices have steadily gone downwards since 2014 but fluctuating world demand and supply could change that in the foreseeable future. In direct relation, the office vacancy rates have increased from 8% in 2012 to over 18% in 2016, but could go down again once demand and thus pricing for oil goes back on the rise.
In the meantime, there is the possibility of foreign interest. With the low oil prices and lower Canadian dollar value, foreign investors, particularly from Asia, are showing interest in Canada’s available office space. In fact, four of the past five purchases of major downtown office space in Canada have been to foreign buyers who have been flocking to the relative safety of the country’s hottest real estate markets, Toronto and Vancouver2.
So, is there hope for the office space market? With oil prices slowly on the rise and with increased foreign interest in Canada’s available office spaces, I would say that there is.
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DJ Mcgauley and Associates Inc. is your Office Space Planning, Renovations and Relocation Project Management Company of Choice for the Toronto, GTA and surrounding areas. If a renovation or relocation of your 2,000 – 25,000 sq.ft. office space is in your plans, contact us to arrange a no-obligation site meeting. We guarantee that by the end of that meeting, you will know all that would be required to make your office renovation/relocation project a successful reality.
Call 416-239-1931, email info@djmcgauleyandassociates.com or visit our website for more information and to complete our contact form.
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References:
1Peresio, Greg, Investopedia, “Why did Oil Prices Drop so Much in 2014?”, http://www.investopedia.com/ask/answers/030315/why-did-oil-prices-drop-so-much-2014.asp
McLean, Steve, Property Biz Canada, 2016-02-28, “Firm Capital Property Trust Ready to Buy”, http://renx.ca/firm-capital-property-trust-ready-to-buy/
2McMahon, Tasmin, Report on Business, 2016 02 23, “Office Real Estate Sectors Settling in for a Tough 2016”, http://www.theglobeandmail.com/report-on-business/economy/housing/the-real-estate-beat/office-retail-real-estate-sectors-settling-in-for-tough-2016/article28858197/
TD Economics, Special Report, July 12, 2012, “Canada’s Commercial Real Estate Markets Primed for Growth”, https://www.td.com/document/PDF/economics/special/sg0712_commercial.pdf
Canadian Commercial Real Estate Industry in Transition for 2016
In 2015, we saw an influx in the purchase and development of mix-used facilities, particularly in strong urban centres like Toronto, Montreal and Vancouver, our Canadian dollar rise and fall to the US dollar, and the shutting down of oil companies in Western Canada. How does this set up the Canadian Commercial Real Estate industry for 2016?
According to PwC and Urban Land Institute’s report on Emerging Trend in Real Estate 2016 (R), the Canadian Commercial Real Estate industry is poised for transition. As a result of our low oil prices and low Canadian dollar, exporting to the US and other foreign countries is likely going to rise which could lead to an over 3% growth in demand for manufacturing, transportation, warehouse and fulfillment centre facilities here in Canada from local and foreign investors. Mixed-use development projects that began in 2015 will continue development in 2016, but the 2015 influx of office and mixed-use developments combined with businesses’ varying responses to the changing economy has led to an increase in office space vacancy. This means that the real estate owners of those developments will be focused on doing whatever it takes to have those vacant spaces filled, even if it means converting parts of their mixed use facilities into medical care or retirement home facilities to meet the growing needs of our aging baby boomer population.
In the meantime, some of our larger Canadian Commercial Real Estate companies are looking beyond the Canadian border for investment opportunities. For some, it is to increase their portfolios and have a bigger footprint in the international commercial real estate industry. For others, it is to take note of the ever growing trends in the foreign markets that could eventually become quite evident in our Canadian market. For example, different parts of the US are seeing an increase in restaurant and bar sales frequented by individuals that are on average 25yrs and up. This trend forecasts an increase in demand for urban space clusters by a millennial generation that are up and coming decision makers with a desire to be more mobile and live in urban clusters that are in close proximity to where they work and play….”
Our Canadian commercial real estate industry may not be as poised for exponential growth in 2016 as it has been in previous years, but it is in a position to allow new opportunities for growth in markets that have not previously shone in the Canadian economy.
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DJ Mcgauley and Associates Inc. is your Office Space Planning, Renovations and Relocation Project Management Company of Choice for the Toronto, GTA and surrounding areas. If a renovation or relocation of your 2,000 – 25,000 sq.ft. office space is in your plans, contact us to arrange a no-obligation site meeting. We guarantee that by the end of that meeting, you will know all that would be required to make your office renovation/relocation project a successful reality.
Call 416-239-1931, email info@djmcgauleyandassociates.com or visit our website for more information and to complete our contact form.
References:
PwC Canada, Emerging Trends in Real Estate(R) – Canada and United States 2016, 2015 December 31, http://www.pwc.com/ca/en/industries/real-estate/publications/emerging-trends-real-estate-canadian-summary.html
McLean, Steve, Real Estate News Exchange, Property Biz Canada, Real Estate Forum – Strategic Thinking for 2016, 2015 December 8, http://renx.ca/strategic-thinking-2016/
New Liberal Government Mandates could significantly improve Commercial Real Estate Industry
Oct 19, 2015 marked an era of change for Canada—a change to a Liberal majority government. What does that mean for the commercial real estate industry over the next four years?
Well, while the Liberal government is not planning to directly invest in the commercial real estate industry at this time, some of their mandates, if fulfilled, could have a significant impact on the industry.
For example, one of the main mandates of our new Liberal majority government is to largely invest into each province’s transportation infrastructure. This means improving and adding public transit options as well as improving local roadways and highways. For commercial real estate owners, improvements in transportation around their properties could improve the marketability of the office spaces available for lease. Commercial real estate owners would not be forced to lower their lease rates to attract potential leasers. Instead they would just remarket their available office space as “accessible to” multiple forms of transit. If successful, this could potentially lower the percentage of office vacancies, at least within Ontario.
Another Liberal government mandate is to significantly invest in Canada’s social infrastructure, that is, to improve where people live and increase their options/locations for child care. For commercial real estate owners, there is an opportunity to further improve the marketability of their lease properties by adding their properties on the list as potential hot spots in which daycare centres could be built, thereby getting in on the $6+ million that the liberal government plans to invest in this area.
Finally, the Liberal government wants to invest in renewable energy. This could be significant in causing new renewable energy companies to be formed or existing ones to expand into and throughout Canada. For commercial real estate owners, this could mean more potential leasers for their properties.
Per Trudeau:
“Every dollar we spend on public infrastructure grows our economy, creates jobs, and strengthens our cities and towns… Government has a responsibility to act decisively and for the public good. Canada’s economic growth was made possible by building ambitiously. We must do so again if we are to transform our transit and transportation systems, create more liveable communities, and ensure that we adapt to a changing climate.”
Only time will tell what the true effect the Liberal government will have on the commercial real estate industry.
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DJ McGauley and Associates Inc. is your Space Planning, Renovation and Facilities Management company of choice for the Toronto, GTA and surrounding areas. If an office move or reconstruction of your 2,000 – 25,000 sq.ft. office space is in your plans, contact us to arrange a no-obligation site meeting. Our friendly experienced team will work seamlessly with your staff to guide you through the process, allowing your employees to enjoy a productive, stress-free experience.
Call 416-239-1931 , email info@djmcgauleyandassociates.com, or visit our website to complete our contact form.
References:
August 27, 2015, Liberal Party of Canada, “Trudeau commits to largest infrastructure investment in Canadian history”, https://www.liberal.ca/trudeau-commits-to-largest-infrastructure-investment-in-canadian-history/
Liberal Party of Canada, “Real Change: An Historic Investment Plan to Strengthen the Middle Class, Create Jobs and Grow Our Economy”, https://www.liberal.ca/files/2015/08/An-historic-investment-plan.pdf
Mixed-Use Building Designs — The Ongoing Trend For Toronto’s Skyline
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It used to be that commercial buildings were just commercial buildings, whether office, retail or industrial, and residential buildings just residential buildings whether apartments, houses or condominiums. But more and more, we see developers marrying the commercial building with residential developments to create new entities now known as mixed-use building designs.
Why the trend?
Well, originally it was in response to the influx of people returning to the urban centres to live closer to where they work. This fostered increased development in condominiums in certain areas of the down-town core, but with land space being limited, developers had to find a new `space` to continue their development projects. That is when mixed-use building designs were brought into being.
With mixed-use building designs, both the business or retail world and the residential world can co-inhabit the same real estate. For businesses, it creates an opportunity to be close to their potential clients or their ideal employees. For residents, it offers the conveniences of everyday living, playing, shopping and working close to home.
Now, developers see mixed-use building designs creating two new opportunities:
- The opportunity to establish community within the urban setting. Not only can mixed-use building designs bring general communities together, but they can bring people with common interests together. For example, in an effort to bring people with an interest in making a career in the arts, there is a mixed-use development arts and entertainment tower slated for completion in the fall of 2015 in the heart of Toronto’s Entertainment District, which will include a 43-storey condominium development strictly for arts-focused tenants atop a 6,000 sq ft arts and event venue which the arts-focused tenants can decorate using their talents as well as use for their fine arts, music, dance or drama events.1
- The opportunity to preserve the past and blend it with the present. With several older commercial buildings built in the 1920s still standing today throughout Toronto, some deemed historical sites are scheduled for restoration. The plans for these historical retail and commercial sites not only includes restoring these sites to their former glory, but also turning those sites into mixed-use building designs by adding brand new multilevel high-rise condominium buildings atop each site. Some of those sites are slated for completion in 2017.
And it won’t stop there. With a mandate to improve the physical appeal of Toronto for both tourists and urban dwellers, and with nowhere to build but up, more and more mixed-use building designs are certain to permeate the skyline of Toronto.
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DJ McGauley and Associates Inc. is your Office Move, Reconstruction and Reconfiguration Project Management Company of choice for the Toronto, GTA and surrounding areas. If an office move or reconstruction of your 2000 – 25,000 sqft office space is a remote possibility, consider contacting us to arrange a no-obligation site meeting. We guarantee that by the end of that meeting you will know all that would be required to make your office move/reconstruction project a successful reality.
Call 416-239-1931 , email info@djmcgauleyandassociates.com, or visit our website to complete our contact form.
1 Artscape, Artscape Sandbox, torontoartscape.org/artscape-sandbox
Williams, Patricia, Daily Commercial News, $300 million Yonge Sheppard Centre upgrade planned, http://dailycommercialnews.com/Projects/News/2015/8/300-million-Yonge-Sheppard-Centre-upgrade-planned-1009361W/
REITs’ Fight to Reduce Office Space Vacancies
Target is exiting. Blackberry has downsized. And with the office space vacancy rate being the highest it has been in several years, office REITS are getting desperately creative.
In some ways, it is no surprise that, despite public and media expectations, REITS are making every effort to attract potential tenants to their available and soon-to-be available office spaces without making any drastic changes to the spaces themselves or their lease rates. Instead, they are getting creative in promoting their available office spaces by simply advertising the added value or “perks” of the office spaces themselves. The most common added value cards they pull out are the “transportation” and “flexible office space” cards.
For example, REITS with office spaces in the Toronto’s Airport Corporate Centre area, which is where Target’s Canadian offices are currently located, promote easy access to and from the airport and other public transportation through shuttle services. Other office spaces located in Oakville and even Kitchener-Waterloo would promote close proximity and easy access to major highways. The promise of new inner-city rail systems, such as the light rail transit system (LRT) scheduled to be active in 2017 in the Waterloo region and the one currently under construction in Mississauga are also big features put out by the REITs to get those office spaces filled. Other office space locations that may or may not pull the “Transportation” card are advertised as open spaces which will allow tenants to easily create the office environment that best serves their corporate image and needs.
Is it working? Well, according to some REITS, the strategies are generating interest in their vacant office spaces, and newer spaces are filling up, but sealing the deals will be based primarily on what potential tenants actually want out of an office space and what they see as the best bang for their buck.
Will lease rates eventually be reduced? I think that given the tenacity of the REITs, that option would be the absolute last resort for them to consider.
Could Target’s Exodus Significantly Effect Commercial Real Estate Lease Rates?
It was all over the news in January. Big chain American retailer, Target, announced its plan to exit out of Canada. That means the close of 133 stores, the loss of 17,600 jobs and the anticipation of approximately 20 million sq ft of commercial real estate across Canada becoming vacant. The question remains: Will Target’s mass exodus affect commercial real estate lease rates in the Canada?
Well, let’s look at the possibilities.
Other commercial or retail companies may jump at the chance to expand their businesses into some or all of those vacant spaces, paying the same lease rate Target currently pays. News has it that some large stores like Walmart, Sobeys, Loblaw’s and Metro are considering taking over approximately 55 spots accumulatively of the 133 soon-to-be vacant locations. Fitness companies like Good Life Fitness and possibly some other large fitness clubs may consider expanding into some spots as well. If all those Target locations are filled with other commercial players, then lease rates would be minimally effected if at all.
However, Target locations are, in general, large and currently only attractive to larger commercial or retail companies that may be interested in expanding into locations that best fit their “target” markets and budgets. Since not all locations may fit their criteria, there is the possibility of many of the 133 Target locations being left vacant.
Commercial Real Estate Investments companies have taken the above into consideration and have posed a possible solution. Those that own the Target locations may consider reconstructing the sites into several smaller retail units in order to make the commercial site more attractive for smaller retail companies. This would give an opportunity for commercial real estate companies to lease the smaller units at higher leasing rates.
The commercial real estate companies that have not considered the above as an option may find themselves with a fight on their hands. Co-tenants of some Target locations, particularly in malls and plazas, could take this opportunity to re-negotiate their leases knowing that the current lease rate for the Target spaces are at least 50% cheaper than those of other spaces. This could drive commercial space lease rates downwards.
So, what will happen with commercial lease rates after Target leaves Canada? Only time, tenant and commercial real estate activity will tell.
REIT’s and Real Estate Developers Strategy for 2015
According to the Emerging Trends in Real Estate 2015 Report issued this past December, one significant trend we should expect to see in Canada’s real estate markets include increased mixed-use development in the cores of downtown city areas.
Here’s why.
Two-thousand-and-fourteen (2014) saw a steady influx of people moving into cities across Canada in efforts to have easier access to work and play. Realizing this flow, businesses in various industries decided to follow. With all this activity, the demand for commercial and residential real estate in city cores has steadily increased.
Real estate developers and REITS see the demands and are responding. Fuelled by an increase in investment funding from both domestic and foreign investors, developers such as Bentall Kennedy LP, Kingsett Capital and Allied Properties REIT are looking into core areas of robust cities across Canada to acquire properties and turn them into mixed-used developments. This creative solution not only meets commercial and residential real estate demands simultaneously, but also increases the value and attractiveness of the properties to existing and potential tenants.
But not every REIT is following the mixed-use development plan. With a focus on credit quality, True North Commercial REIT, for example, has put its focus on acquiring office buildings housing government and other rated tenants with long term leases and has no intention of adding a residential area to those buildings. Its residential component, True North Apartment REIT, will continue to focus on acquiring apartment housing in both Canada and the United States with the strategy of promoting them as affordable housing options.
The real estate developers following the mixed-use development plan will need to design or redesign their properties to appeal to both the residential tenants looking for convenience in every area of the lifestyle they seek, and the commercial tenants trying to attract them.
REITS Respond Differently to Demand for Office Space
Earlier this year, the demand for office space in the Canadian market was on the rise particularly in the major city centers. Local REITs have seen it and have responded…differently.
Allied Properties REIT and Dream Office REIT are the two main REIT companies in Canada whose portfolios primarily contain office spaces for rent or lease. In the nine months ending September 30, 2014, Allied Properties REIT had invested $210 million in acquisitions of seven properties with 568,000 square feet of GLA (gross leasable area) and 553 parking spaces, and another $15 million in 460 King Street West in Toronto, all of which are now part of its rental portfolio. In that same period, Dream Office REIT sold eight properties for a total of $71.5 million and invested $20 million in building improvements aimed at attracting and retaining tenants to the remainder of their portfolio.
Leasing activity for both REITS remain strong. Allied Properties REIT leased over 831,000 square feet of office space in nine months, plus an additional 59,500 square feet at 250 Front Street. As of last week, it was still negotiating five new leases which, if completed, will increase its GLA by 70,000 square feet. Dream Office REIT has already leased 810,000 square feet of office space to date with 219,000 square feet being in the Greater Toronto area. Portfolio occupancy for both REITS remain strong at 93% for Dream REIT and 91.6% for Allied Properties REIT.
What does this mean for business owners? In short, if you are thinking of renting or leasing office space in Canada, act quickly but responsibly. Available office space is out there but there may be slim pickings when finding the ones that would be ideal for your organization.
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Emory, Michael R., Allied Properties, “Allied Properties Real Estate Investment Trust Announces Third-Quarter Results with Continuing Broad-Based Momentum”, Market Wired
Dream Office REIT, “DREAM OFFICE REIT REPORTS THIRD QUARTER 2014 RESULTS”, dream.ca/office
Corporate Space Planning & Relocation Advice 