Discover the next chapter of the Vancouver office market | RENX

McCarthy Tetrault’s 80,000 San Francisco office in Vancouver. (Image courtesy: Colliers)

Ask the Expert: Colin Scarlett

1. Why is Vancouver a great location for office occupants?

The Vancouver talent pool is one of the major attractions for organizations in the area.

High-level talent choose Vancouver for the lifestyle it offers, from easy access to nature and outdoor activities, to the waterfront, diverse culture, gourmet cuisine, and a vibrant social life. These factors allow people to find the right work-life balance and many financially rewarding jobs.

For employers, office space accounts for only 4-8% of their overhead expenses, while employment can be as high as 90%, especially for some technology companies. Global and US tech organizations are happy to pay what we consider premium rents for office space to access top-tier talent at affordable prices. This dynamic won’t change anytime soon. The Canadian political landscape, progressive society, healthcare system, and pro-immigration policy provide significant benefits to organizations looking for a stable destination to grow or start their businesses.

2. What major changes have you seen in this market over the past five years?

Geographically, Vancouver is a good alternative to the technology sector. The most famous Tech companies have invested in Vancouver for their shared time zone with their main offices in San Francisco, Los Angeles or Seattle; accessible and convenient transportation hub; and a reputable talent pool, which has led to increased interest in and perpetuity of the city. A good example is companies like Microsoft, Apple, Amazon, Fortinet, and Animal Logic that are expanding into Vancouver in beneficial ways.

Vancouver has also been a favorite in the entertainment industry, with the visual effects and gaming sectors benefiting from tax incentives and currency exchange. As such, the local businesses that support the industry have seen growth.

Professional service organizations such as law and accounting firms have expanded to guide clients through the complexities of cross-border and trans-Pacific transactions, as well as to manage the critical mergers and acquisitions activities that Vancouver generates. These companies continue to invest in Vancouver to deal with a seemingly endless workload.

3. What are some of the key takeaways when it comes to understanding your clients’ future vision for their organization?

It is important for the company to lead the real estate sector rather than the other way around. I work with my clients’ senior leadership teams to understand their long-term vision and create a real estate strategy based on their business goals. I use an exclusive data-driven methodology to fully understand my clients’ business. I offer unique insights into their operations and industry to help them make informed decisions that positively impact culture, employment, retention, and productivity. Good data leads to good decisions.

4. Historically, professional service firms use office space to recognize and reward employees. Does that still play a dominant role in the company’s plans to allocate its space according to its talent pipeline, or has the culture around place and recognition changed?

A third of law firms in London, England have an office-less open space scheme; Australia has also taken a similar approach. In North America, the market has experimented with this trend and generally considers it a failure. The future of professional services firms remains one-to-one offices with modifications to incorporate a greater sense of hospitality and team collaboration.

Equality, Diversity and Inclusion (EDI) has truly become a top priority for you when designing spaces. Carefully thinking about accessibility, not just on a physical level, but at different levels of the organization, helps drive the hiring process, ensure retention, and cultivate a positive culture. Gone are the days of big corner desks for CEOs; An equal workplace is the future. For additional information, read my full EDI report here.

5. What trends have you seen regarding rent and space terms before and after the pandemic? Are there any unique post-pandemic trends around subleasing based on the hybrid business model?

Elements of a hybrid business model are here to stay. The epidemic was the proof-of-concept with a two-year test period. However, when we return to the office, many organizations take different approaches. It’s not a one-size-fits-all but a customized solution for every organization and even every regional office. Many organizations choose to bring all employees back to the office for a minimum of three days a week, all on the same days, requiring a workstation for each person. This means minimal or no shrinkage of their space.

We are seeing some very important leases being implemented post-pandemic, by thoughtful large organizations working to align their long-term business goals with the physical spaces required for their employees to excel. In these cases, we see not only square footage for space, but best-in-class offices with high-quality amenities that create a positive, innovative, and collaborative culture.

Throughout the pandemic, feelings of isolation and its impact on mental health have been a major concern for companies. Organizations recognize the mental health benefits of employees and do their part by providing both the tools and the space to promote it. Bringing people together in vibrant community spaces is just one strategy they implement to re-establish connection and feelings of unity among their workforce.

6. Will professional services firms continue to focus in key market financial centers or are there other trends for pivotal and spokes models?

The business continues to be central in the heart of downtown for easy access to customers and banks. It also allows a dedicated axis to cross.

Vancouver benefits from a strong transit network that serves the surrounding areas, contributing to the work-life balance valued by the city’s talent pool. Efficient and accessible transportation allows employees to choose a neighborhood that fits their lifestyle outside the office.

7. How long have you been serving office occupants and what unique experience do you provide to your clients?

I’ve specialized in creating real estate solutions to business challenges for over 25 years, focusing on technology and professional services companies, working with some of Metro Vancouver’s largest companies. In the past 10 years, I’ve visited 21 cities around the world to research the future of office space and to see global best practices firsthand. I have completed transactions for 20 new projects in Metro Vancouver. For me, it’s exciting to have helped build the Vancouver skyline as the city continues its growth and trajectory of success.

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