Knowledge Leader Fall 2011: Best Issue Yet
The most recent Knowledge Leader, which is Colliers International’s property magazine, is exceptional. Yes, I’m biased by the article featuring David Gibson of Perimeter Development and the Breithaupt Block but I really liked the international slant of this issue.
Waterloo Vacancy is projected to Spike
This is precisely why the research team at Colliers tracks “vacancy” and “availability”. If you were only tracking availability in Waterloo it would look like business as usual. In actual fact there is a large amount of leased space that is not occupied.
This is a great insight into the Waterloo Market because it foreshadows a change in the market. In the event companies do not start to use their vacant premises they will start to look for ways to reduce real estate costs and start putting space back on the market. Companies in need of space or with a pending lease renewal will have greater opportunities. Landlords will start looking at strategies to protect their portfolio of tenants from increased competition. And developers will delay or stop projects once they get wind of this latent supply. I hope you use this in your future plans.
The Great Waterloo Region Office Space Race
Last week, while sitting by a fire in the Canadian wilds, a designer extraordinaire, long time friend and I had a discussion about office space and the challenge of convincing decision makers that a company’s work environment is crucial to its success. We talked about creating matrices to measure the effect of work environment on company output. After some quick research on the web, I discovered there are some very extensive studies on the topic of office work environment and productivity. They are also very boring; this is not what we had in mind around the campfire. It occurred to me that the most relevant measure of a company’s physical environment is how people feel about the space. What do the employees, management, HR, clients, business partners and general public say about your office space from their very different perspectives?
This brings us to “The Great Waterloo Region Office Space Race”. I’m holding an online competition to see who has the best office space in Waterloo Region. I know what you are all thinking, “Google is a shoe-in.” Maybe, but in the world of social media, I think the field is wide open. I often hear comments about the office environment of groups like MFX Partners, Chorus Entertainment and Treehaus. Any one of these groups could win this competition with a little ingenuity.
Here is what I think is going to win this thing:
Work space that supports culture! Are you a tech group obsessed with turning out the next big app? The people at your company work crazy hours with inspiration, collaboration and office downtime being important. Then submit pictures of your killer think tank, lounge area, sleep room or the wall mounted docking station next to the toilet. If your company has a culture of sustainability, then let’s see your designated electric car parking spots, furniture made from recycled tractor parts, your employee common garden, or your worms that eat organic coffee grounds and poop silk. Here is your chance to say “I work in the coolest place ever” and if my suspicion is correct, authenticity will win the day.
Here are the rules:
September 30th, 2011 is the final submission date.
The submissions will include the following:
Company name and address
Photos of the place you work.
A description of the place you work. Make it brief or drone on forever, we don’t mind.
Contact person and phone number
This will be online, so please have permission to submit your space to the competition.
Email it to me at: john.lind@colliers.com
In the first week of October, we will start an online poll that will end November 4th, 2011. The results of the poll will be confirmed and published the following week.
So what do you get?
The winning company will receive a yet to be conceived trophy, a spot on Colliers Canada Website, a post on “the informed tenant” blog about the winning submission, and the all important bragging rights.
Good luck and feel free to email me with any questions.
Why Are Taxes Lower in Former Industrial Buildings?
I asked our Vice President of Valuation and Advisory Services, Chaney Morkill, this question. Chaney is my go to guy when I have inquiries about anything tax related. This situation is most prevalent in my business when office tenants are considering Brick and Beam options. Chaney explained that there are a number of factors which could account for a difference in taxes between comparable properties, but one occasion when he has seen dramatic increases occur is when a property moves from being assessed by the Cost Approach to the Income Approach to Value. I have paraphrased Chaney’s email to me below:
The reason is that these former industrial buildings were long assessed using the Cost Approach to Value, which includes a deduction for depreciation.
Most of these properties have become revitalized as income producing properties. As such, the assessors are now analyzing rents in the area and capitalizing the income streams. The result, in most cases, is that the capitalized commercial/retail income rents produce a much higher assessment than one achieved using the Cost Approach with depreciation. Most of these properties have had dramatic swings in taxes and each should be reviewed carefully.
Owners/Occupiers have an opportunity to avoid these huge increases if they are sole occupants. As such, one would argue the site is not an income producing property and should continue to be valued on the Cost approach.
Each property and tax situation is unique and should be evaluated individually, but this does shed some light on a number of discrepancies I have seen over the years.
Open Letter to BlackBerry Bosses Still Rings in My Head
The line “Some of our offices feel like Soviet-era government workplaces.” is still ringing in my head five weeks after reading the Open letter to BlackBerry bosses. I fear I am being too subtle in my posts about office space so let me make this absolutely clear:
1. The office space people work in is important!
2. A company’s office space not only reflects its culture, it defines it!
_
Photo Update – The Breithaupt Block (via Colliers Ink)
Below is a great update on The Breithaupt Block.
via Colliers Ink
Colliers INK
The Waterloo Region Colliers office has started a new blog. This is a really great place to check in and see what our whole office is thinking, working on, or passionate about. I really like this format because it is written by the great people who work in this office. I hope you enjoy it.
Business Taxes in Canada are a Competitive Advantage!
I think the title of this post may come as a surprise to a number of people. I am sure when Gregg Wassmansdorf sent me his white paper titled “Business Taxes in Canada Present a Competitive Advantage” he suspected I, along with many Colliers agents, do not know just how competitive Canada is on a global perspective. He was right, I didn’t know.
Here are a couple of excerpts from Gregg’s paper that I found fascinating:
- Once a high-tax jurisdiction, Canada has become the most tax-competitive location among the G-7 countries, and has the fiscal and political capacity to reduce business taxes further.
- Canada also maintained a clear advantage over its biggest trading partner, the United States, in all tax categories.
- Incentives offerings [in the United States] are necessary to reduce the overall U.S. tax burden in order to compete with alternative locations outside the country.
- At the federal level, Canada has some of the most aggressive and lucrative research & development tax credits in the world.
- Successive Liberal and the Conservative governments have transformed and improved Canada’s business tax profile. Today’s political debate revolves mainly around how and when Canada will become even more tax competitive.
As Gregg put it, “we have a great story to tell”. Now we need to get out there and tell it.
Waterloo Region Market Update Second Quarter, 2011
The introduction of Apple’s new headquarters two weeks ago was a milestone for the future of office space development. The project Apple is going to undertake has drawn a myriad of opinions with regards to how this building will perform for Apple in the years to come.
Two camps have emerged since Apple presented its future building and they look like the following:
Camp #1 is awestruck by the “spaceship” and all the accompanying features. They point to the wisdom of the 80% landscaping made possible by the underground parking, the marvel of having 12,000 people in one building, the power plant that will generate the primary power supply and the beautiful glass curtain wall. This group believes it is a fitting home for one of the greatest companies the world has ever known.
Camp #2 believes this is Apple re-visiting a broken model of the suburban office campus. The campus is criticized for its lack of urban feel, for turning its back on the street, for not fostering a creative environment and for distancing the company and employees from the community. This group points to the office campus as the office space of old which is rejected by the most creative minds of today and goes against the current cultural trend to embrace the urban model. This group believes this is a failure on Apple’s part and will lead to the decline of a company that is a world leader in design and aesthetics.
Apple has gone to great lengths to design a building that captures their vision. There is an obvious emphasis on minimizing cars and traffic while embracing foot traffic. The old campus model did not foster collaboration, with multiple buildings separated by parking lots. Apple obviously wants to bring more people together under one roof and stimulate communication and collaboration. The enormous contribution to green space is not a token measure; it is reminiscent of university campuses of old that were purposely constructed in large expanses of countryside to facilitate thought. I think camp #1 has missed the obvious; Apple is borrowing some of urban architecture’s best attributes and applying it to features only suburban office space can provide. Buildings that can accommodate 12,000 people all under one roof with underground parking are not uncommon in most major metropolitans, but you won’t find them surrounded by a hundred acres of trees.
I understand camp #2′s position that it appears Apple is sticking to an outdated model of the office campus that has few redeeming qualities from a design perspective. Apple is taking another shot at the suburban office campus. There is no question that urban office space is on the rise and attracting some very high-profile technology firms. I also agree that the urban landscape can spawn creativity, but I don’t believe for a minute that it has the lock on the market. Let’s remember, Apple is essentially moving down the street from their current head office location and up until now no one has accused them of suffering from a creative deficit.
Camp #2 seems to miss one very important factor in the discussion of Apple’s master plan; location. This is California; people here are not yearning for Manhattan. They have great weather, nice houses, well-paying jobs and they are surrounded by one of the highest densities of creative people the world has to offer. To assume Apple has miscalculated and is constructing a white elephant in the middle of suburbia is not giving them enough credit. Apple is building exactly what they need for the future of the company in Cupertino. I’m not advocating the return of soulless, cookie cutter, urban office buildings we constructed in the seventies, eighties and nineties, but if anybody can create a better model, it is likely Apple.
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