office space
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.
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
5 Tips On Avoiding the Post-Office Relocation “Growing Pain” of Insufficient Office Space
There is probably nothing more frustrating than moving into an office space that is insufficient in meeting your current and/or your future business needs. Avoiding this dilemma requires some proactive planning.
First, you need to know what you are starting with and what you want to end up with by the end of the lease term. You can do this by
- Acknowledging what you have and/or need in the short term (staff wise and equipment-wise)
- Having a five-year business plan that details anticipated changes in staff and equipment
Second, take measurements of all the office furniture and office equipment you plan to move into your new office space in the short term. With this information, you will be able to accurately plan the layout of your new office space based on actual rather than assumed information related to your office furniture and equipment.
Third, consider your staff (current and future) and the type of work spaces they will need to function most effectively. How many will need to be in collaborative workstations? How many will need closed-in offices? What about meeting rooms, lunch areas, storage areas?—how many would your organization need? Your answers to these questions multiplied by the knowledge that the standard space allotted to each room or staff member ranges from approximately 36 sq.ft (for a small cubicle) to 300 sq ft (for a large office) can help determine the total ideal size your new office space should be in order to meet your current and future business needs.
Fourth, when checking out a potential office space, walk with a measuring device and use it to document the square footage (or square metres) of the office space. If the office space is somewhat irregular in shape, then take note of wall lengths and heights and the angles these walls create when they meet.
Finally, before signing any lease agreements, take all the information from the previous steps and create basic office space design layout. This can be done either by using design software or on paper with 2-dimensional cut-outs representing the office furniture and equipment, or you can have a professional office space planner provide one for you if you do not have the time or resources to do this yourself. Having a visual of each potential office space can help you determine which space would be optimal for your business. Just make sure your office space layout is to scale so that your decision is an accurate one.
There are other factors to consider when choosing the right office space such as electrical and internet capacity, but following the above can at least help ensure that your next office space is the right size to facilitate your current and future business operations.
Office Space Design – Your Secret Weapon to Attracting Ideal Candidates
It is no secret – the interview process between companies and candidates is actually a two-way process. Not only is the interviewing company aiming to hire “good fits” to join their team, but the potentially “good fits” are also deciding if the interviewing company is right them. What does this have to do with office space design? A lot, considering companies can increase the probability of hooking their ideal candidates through their office space design.
It is happening in Europe and in different parts of the United States – -Companies are revamping their office space design to fit the mentality (and thus attract the top talents) of the young and up and coming workforce, namely the Generation Y and Z populations.
What exactly does that mean?
It means companies looking to attract the top talents of the Generation Y and generation Z populations (i.e. those born after 1979) are creating office environments that encourage creativity, collaboration and meet tech savvy needs. For some companies, that means trading traditional high-walled cubicles for lower-walled ergonomic workstations clustered in small groups. For other companies, it means trading the traditional boardroom table and chairs of a meeting room for either soft leather couches and coffee tables to create a relaxed “living room” styled social area, or with high cafe tables and bar stools to create a “café” styled office space design–all to encourage collaboration and teamwork. Open ceilings and bright bold primary colours accent the new office space design to encourage the concept of “no limits” on creativity.
Besides being collaborative and creative, both Gen Y’ers and Gen Z’ers are very comfortable with technology. In fact, most are tech savvy. So, if companies want to hook their ideal candidates from these generations, they will need to consider adding additional usb and other connection ports throughout their office space design or add a tech –heavy social networking meeting areas so that people can connect their laptops, IPads/tablets or other technical devices while meeting with their colleagues or clients in person or online. This will become more and more of a need once the younger Generation Z population enters the work force.
So what about clear-walled offices and meeting areas? Will they become a thing of the past? I would suggest no because they will help meet one more need of the Gen Z’ers—the need to on occasion work alone and only collaborate with others through online methods.
References:
About.Com Legal Careers, Generation Y, http://legalcareers.about.com/od/practicetips/a/GenerationY.htm
Blogger, JuJu Blog Site, Characteristics of Generation Z, http://characteristicsofgenerationz-juju.blogspot.ca/
Extend Your Brand Into Your Interior Design
OK. I’m about the make a statement that may have some of you in shock.
Ready? Here it is:
Interior design and branding should go hand in hand when designing or redesigning your office space.
Surprised? You really shouldn’t be. Consider this: “branding” by definition is the act of imprinting some sort of mark or unique identity to something in order to make it stand out or be memorable. Companies in general aim to brand their products and/or services with colours, artsy images, logos, a slogan or any combination of these so that the outside world will remember them…but what about when the outside world or even your staff comes into your office space? Consistency both inside and outside of the office can only further enhance your branding efforts.
So how can a company incorporate elements of its brand into the interior design of an office space?
First, consider your walls. Walls are the main canvas of interior design. Any or all components of your brand can be displayed on your walls. So if colour, for example, is a key component to your brand, you can either paint all the walls your brand colour, create an accent wall with your brand colour, or paint portions of your wall the brand colour. A logo can be painted or mounted on one of the walls in a reception area or boardroom. Artsy images such as waves, stripes or bubbles that may be related to your brand can be painted or stenciled as accents to your wall design. Even a slogan or mission statement can be stencilled or mounted on a wall of your office space in order to reinforce your branding efforts.
Now, consider your floors. Similar to walls, colour, logos, slogans or artsy images can be incorporated right into your floor or carpet design, budget permitting. Most companies that incorporate aspects of their branding into their floor design would primarily have this in their main reception area. (Of course, the floors would need a special coating to ensure such images remain intact in high traffic areas.) A smaller budget option would be to have welcome mats in your brand colour either with or without your logo or artsy image intact.
Finally, consider your non-fixed items such as desks, furniture, and accent items such as table mats, coasters, pillows, flower pots or other accent décor items. A simple application would be to purchase such items in your brand colours and have them placed in key areas of your office space. Some companies may take this step further and add their mission statement, logo or branding image on some of these items.
Branding is not just for outside the office. Whether you own or lease your office space, there is always a way to extend your brand into the interior design of your office.
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