highlights - Primecorp Commercial Realty

PRIMECORP PRIMER
2016
Vol. 1
OTTAWA OFFICE MARKET NEWSLETTER FOR TENANTS
BRUCE WOLFGRAM
Vice President/Broker
HIGHLIGHTS,
TIPS, NEWS
P.Eng., LEED AP, ICD.D
613.722.2020 x 233
[email protected]
TCN Worldwide Member
HIGHLIGHTS
MA R K ET STAT U S
VACANCY RATE
CURRENT OVERALL MARKET STATUS > Sure and steady. Public sector staffing levels have not decreased further over the past halfyear. Furthermore, the private sector has been slowly but surely moving forward. In fact, most high technology firms are doing quite
well, with many expanding their offices at renewal time.
OFFICE SPACE
ABSORPTION
DOWNTOWN > Downtown Ottawa currently offers tenants great value compared to lease deals done 5-8 years ago. Vacancy rates
are still high, enticing landlords to provide incentives to attract or retain tenants. Most leasing activity downtown has been focused on
tenant repositioning (ie, “musical chairs”) as there has been little new tenant demand from outside the city.
TENANT
NEGOTIATING
POWER
THE MYSTERY EFFECT OF DND > When the Department of National Defence begins relocating to the massive former Nortel campus
on Ottawa’s west end starting in late 2016, DND will not be renewing over 40 leases throughout the city. Some of these buildings are
obsolete and will be demolished or retrofitted into new office or residential condo space. However, the office space that does go back
on the market (mainly Class B) may have a negative effect on the downtown’s office vacancy rate. If so, downtown Ottawa may remain
a tenant’s marketplace for at least another 18-36 months.
R E C E N T LY C O M P L E T E D D E A L S
LANSDOWNE > The new Lansdowne Park redevelopment is fabulous, having attracted an array of retail and restaurant establishments.
Not so much for office firms… at least not yet. Minto has erected a new office building within Lansdowne which still has the majority
of its space vacant. However, we believe that once companies become more aware of the advantages of Lansdowne, Minto’s office
building will fill up. A repeat season of the Ottawa Redblacks making it to the Grey Cup would certainly help in this regard!
Irdeto
2500 Solandt Road
Library of Parliament 50 O’Connor Street
OTTAWA EAST > Controlex has begun sitework and pre-leasing on a new 160,000 square foot office building at 405 Terminal Avenue,
near the VIA train station. It will be a sister building to the recently constructed 395 Terminal Avenue building now fully occupied by
Canada Revenue Agency.
Tech companies begin
to eye Ottawa’s ByWard
Market by Adam Stanley (edited)
John Criswick is wearing a black T-shirt,
a blazer, jeans and some well-worn Nike
running shoes. In his office on the fourth
floor of 126 York St. in the downtown
ByWard Market here, there are stacks
of paper on his desk and a lone lamp
illuminates one corner.
space is about $20 a square foot, whereas
the ByWard Market is about $30, according
to Mr. Wolfgram. The offices in Kanata are,
on average, much larger and suitable to
the tech giants and multinationals that have
traditionally located in suburban locations.
“The Market is becoming more vibrant,
whereas Kanata has always been volatile,” Mr.
Wolfgram says. “At one point it was zero per
cent – in 1999, before the dot.com boom. Every
square foot of space was occupied.”
LEASE TIP
When negotiating your lease, don’t
agree to “restore” your premises at
the end of your lease (meaning you
agree to tear out all of your walls,
carpeting, etc. that you had installed
when you first moved in). Agreeing
to such a restoration obligation can
cost you up to $10.00 per sq. ft.
Approx. 30 per cent of residents who live in the
ByWard Market are, according to the Ottawa
Neighbourhood Study, between the ages of 20
and 29, which is about double the average for
Ottawa. It’s a millennial space, and that is who
companies such as Magmic are reaching out to.
Hot Office Trends
This is where the magic happens. Or in this
case, Magmic.
“A lot of companies have been bought out
and moved to Kanata and they lost a lot of
their employees because of that,” according
to Mr. Criswick.
The commercial real estate world is changing. Odds
are that you will find at least one office trend from this
list impacting your operation in the coming year.
That’s the name of the mobile gaming
company of which Mr. Criswick is the chief
executive officer.
Whereas employees downtown have told him
they realize: “I’m going to be in the office, but I
can go anywhere and do anything.”
Magmic has stayed loyal to the lively core
neighbourhood throughout its history and
resisted the pull of Kanata, the long-time hub
for technology offices about 30 minutes west of
downtown Ottawa.
The Shopify effect
The expanding tech darling of Canada’s
capital recently moved from its office in the
ByWard Market to Ottawa’s newest – and most
expensive – office tower at 150 Elgin St., just
steps from the War Memorial.
Enhanced Technology
Ample high-speed connections and support for
wireless devices isn't high-tech any more. It's the
new normal. 2016's hottest office trend is in the form
of infrastructure tweaks - like installing access points
that don't just cover your office, but that cover it in a
comprehensive fashion with strong signals and high bit
rates in every part of it. Others are more tangible like
digital whiteboards. Better office tech also supports the
ongoing trend towards greener buildings.
Outside his office is mostly silence – a team of
developers, designers and a small administrative
staff tap away quietly on their computers – and
the smell of popcorn is in the air.
For Criswick, the Market gives his employees
variety and a lifestyle. “Talent usually gets it
right away; they like that it [the office] is in
the Market,” he explains. “I would say the
employees have access to anything they need.”
Other companies, particularly tech startups,
have also warmed to the area that’s full of
trendy restaurants, coffee shops and nightclubs,
and is close to shopping, culture and Ottawa
landmarks such as the Parliament buildings.
Bruce Wolfgram, vice-president of Primecorp
Commercial Realty Inc. in Ottawa, says Kanata
has traditionally been the main high-tech area
in the city, but over the past five years a strong
interest in being downtown has developed.
“What we’ve found is that younger millennials
coming to the work force want to have
live-work-play,” he explains. “The challenge
becomes, once you’ve hit a certain size, there
are not many options left in the Market or
downtown that are affordable.”
Ottawa Mayor Jim Watson agrees, regarding
the young work force in the city.
“Kanata is still the largest concentration of
where tech companies are, but we’re seeing an
interesting growth in the market,” Mr. Watson
says. “From an employee attraction point of view,
a lot of the people in high tech are younger, and
they want to be close to an urban core.”
From a cost-to-lease perspective, Kanata
“We started downtown and there was never
any reason to leave,” says Daniel Weinand,
Shopify’s co-founder and chief culture officer.
The e-commerce company has grown to
more than 900 employees and a valuation
of $1.27-billion. It occupies 146,000 square
feet at 150 Elgin.
It’s a far cry from its first office, which amounted
to “a few chairs around a table in the Bridgehead
coffee shop on Elgin Street,” Mr. Weinand says.
“Shopify is a huge success story,” adds
Bruce Wolfgram, vice-president of Primecorp
Commercial Realty Inc. “Not all firms have
the financial wherewithal to stay where they’d
like to stay and continue that live-work-play
environment.
“Shopify has confirmed the desirability to be
somewhere other than Kanata.”
by Don Catalano (edited)
Vacant Desks
The combination of the aging Baby Boom and the
burgeoning Millennial generation drives a somewhat
frustrating office trend - vacant desks. While more
strategic configurations can help to mitigate this trend,
expect to see your office get more supportive of flexible
schedules and working locations. Boomers need them
as they care for aging parents (or for themselves), while
Millennials demand them simply because they want
them. Whatever the reason, this means that your office
will end up with people working less predictable hours.
Better Open Office Buildouts
While the open office has been the office trend for
the last couple of decades, space planners are
waking up to its inherent complexity. Open spaces
are great for collaboration and learning, and also work
TENANT
LOCATION
Conversant
515 Legget Drive
Qlik
AREA (SF)
390 March Road
Sun Life
50 O’Connor Street
Taske Technology
2650 Queensview Dr
Thinkwrap Commerce 450 March Road
8,184
31,409
111,000
45,671
6,228
6,432
19,605
wonders at lowering occupancy cost by increasing
density, but they carry some real drawbacks as well.
2016 will bring more open offices, but also more
privacy in those offices. This will help to support higher
employee productivity for focus-intensive tasks.
Employee-Driven Design
Since truly talented workers remain hard to find for
today's highly specialized tasks, your company may
have to get more aggressive about bringing in talent.
One way to do this is to create spaces that appeal to
them, as opposed to spaces that meet your goals or
your strategy. This could mean offering a greater mix
of workspaces, offering additional shared spaces (like
cafes), or even allowing employees to specify their
desired space as a part of their hiring. In any case, this
means that your office will probably become less cookie
cutter and less predictable in its design moving forward.
IDEAS OF THE DAY
If it comes down to ethics versus a job,
choose ethics… you can always find
another job…
_Sallie Krawcheck CEO and Co-Founder of Ellevest
Sooner or later, those who win are those
who think they can…
_ Paul Tournier Swiss physician and author
Son, if you really want something in this life,
you have to work for it. Now quiet, they’re
about to announce the lottery numbers…
_ Homer Simpson Cartoon character
“WE WELCOME AND APPRECIATE
YOUR REFERRALS.”
@PRIMECORP1
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