The demand side of real estate is often glazed over by real estate companies. We refer to economic conditions, historical statistics and past data sets not ever really being able to quantify the impact on demand. For our 2013 Market Outlook Breakfast we took a hard look at a number of different influences on demand and I was fascinated to discover the extent to which demographics impact the office real estate market.
Consider the following two demographic stats:
- For the first time in history we have more people reaching retirement age than reaching the age to enter the work force.
- Right now, both Baby Boomers and their children are in the work force. We have the largest working age population of any other time in our history- and, apparently we have enough office real estate to house them all.
Demographically, future demand for office real estate is decreasing.
I was disappointed recently to read a disparaging comment on the internet regarding Downtown Kitchener. So much effort by so many has gone into revitalizing the downtown. It made me think about how invested Colliers is in the downtown and how many milestone projects Colliers has participated in over the years.
72 Victoria may not mean much to the casual observer but to a real estate person looking at the historical relevance, 72 Victoria is the fore-runner to the Tannery District. The building was purchased, developed and leased by Colliers. Mike and Mark Cowie of Colliers saw the potential for this type of product very early on and, in my humble opinion, were years ahead of their time in the Kitchener Market. They subsequently sold 72 Victoria to Allied Properties, giving Allied their first building in the Kitchener market.
Allied has since expanded their Kitchener portfolio with the purchase of The Tannery and is a co-owner of the Breithaupt Block.
The Kaufman building which was to become the landmark Kaufman Lofts was marketed and sold by Colliers specifically as a condominium development. Demand for the units was so strong the developer added two floors to the building during development. Today it is one of the most recognizable examples of adaptive reuse in the region.
Colliers represented Perimeter Development Corporation in the purchase of the Breithaupt Block and continues to work on the leasing for the building. From the very beginning, our team has worked to help Perimeter realize their vision and was just awarded the 2011 Award of Excellence in Marketing – Best Property Campaign for our work on the project.
Most recently, Colliers marketed and sold the Delta Hotel in downtown Kitchener to the Vista Hospitality Group. This sort of investment in the downtown is particularly rewarding because Vista’s vision is based on the progress already made and a promising outlook for this up- and- coming urban location.
I would be remiss if I didn’t point out that Colliers own office is in downtown Kitchener. We work here, play here and entertain here. The changes we have witnessed over the past fourteen years are nothing short of spectacular. More people work and live here than ever before. The plans we see for the future are exciting, enlightened and bold.
I predict that downtown Kitchener will be seen as an outstanding example of downtown revitalization in North America.
I have come to realize that Waterloo Region, with its comparatively small office market, is an ideal place to identify trends in office real estate. When I talk to companies in Waterloo Region about their business plans, strategies and goals, they put an enormous emphasis on the “War for Talent”. Companies everywhere are competing for good employees.
A typical conversation with a company from Kitchener or Waterloo sounds a little like this:
“RIM pays more and has an excellent benefit package; Google has unprecedented brand appeal and is just plain cool; Toronto is 60 minutes away and offers the allure of a great cosmopolitan city; (and for those not tied to any particular global location) California with its mountains, oceans, temperate weather and immense tech community is a pretty big draw.”
What I’ve noticed is that although I continue to have this conversation with tech companies, I’m now discussing the same things with every other company striving to grow and be relevant in today’s competitive market place. The discussion has moved beyond the recruitment of up-and-coming engineering students to every other type of job in every industry. It’s no longer just about the core business or executive positions, it’s about every position in the company.
The tech industry has spent decades in the trenches fighting the war for talent. What can we learn from the industry leaders that are the most successful in attracting and retaining talented people? They create great work environments.
Colliers International just published the 2012 Parking Rate Survey for North American central business districts. This report is a fantastic tool for evaluating the cost of parking to a business.
Urban office space is experiencing strong growth and renewed interest, and with that, businesses need to evaluate the trade-off in parking costs.
The equalizer is public transit and the livability of a city. Transit provides a better alternative to moving more people in and out of a city. A livable city provides proximity to the central business district allowing more people to commute to work by foot, bike or bus.