HOW THIS OFFICE CONSOLIDATION IS BRINGING EMPLOYEES BACK
December 5, 2022
Bringing Employees Back
As businesses begin focusing on bringing employees back to the office, many are still grappling with which strategy to deploy. The past two and half years saw companies utilizing a range of work options; from fully-remote to hybrid and all-hands back-to-the-office approach.
The crux of the issue lies in the fact that many employers reported an increase or equal level of productivity when operating remotely, while a large percentage of workers saw the value in forgoing the commute and, in some cases, moving further out of the City to reduce living expenses. This dynamic has been further exacerbated by a competitive labour market, whereby candidates, in some cases, demand more flexibility and the option to work from home some of the time.
As a result, we have seen – large corporations and small businesses alike – reducing their real estate footprints to save on costs. At the same time, and due to the increase in vacancies, we see a ‘flight to quality,’ whereby office tenants are ‘trading up’ for better space at a similar price.
And so, the question has become how to balance the productivity, engagement, and wellness of employees while minimizing costs, eliminating redundancies, and taking advantage of the softened market.
As you will see in this case study, our Client was looking to address all of these issues by creating a space so good that their people would be excited to come back.
Read on to learn how Lee Toronto helped their Client consolidate their footprint into a new, state-of-the-art headquarters while securing the best possible rents and inducements.
Challenge:
Miller Paving was looking to consolidate its offices post-pandemic and have their employees come back to a new working environment under one roof. They had to decide between waiting up to 3 years for the construction of a design build to be completed or find an existing building with sufficient space to support the company’s long term real estate needs, business objectives and employees’ well-being by Q4 2023.
Features:
- Approximately 60,000 SF
- 100% office
- Plenty of free surface parking
- Immediate access to Hwy 404
- Close proximity to all amenities
Transaction:
First, we did a needs analysis to establish the client’s real estate requirements. Next, we conducted a survey in the GTA North East Region based on Miller’s search criteria; a minimum of 50,000 sq ft of contiguous space and immediate access to a major highway being key. Through this process, we uncovered both on- and off-market leasing opportunities.
Once we qualified each opportunity, we toured the client’s preferred options. We then ran a thorough RFP process and did a complete financial analysis of each leasing proposal received. A summary of our findings was presented to the client. Miller Paving would have to choose which building they wanted to pursue via an Offer to Lease.
Results:
After careful financial review of each leasing proposal, Miller Paving ultimately focused its attention on one specific building that offered everything the client was looking for, including an outdoor patio for Miller’s exclusive use. Following successful negotiations with the Landlord, we secured a below-market net rental rate with above-market inducements for a quality building fronting onto Highway 404, south of Major MacKenzie Dr.
Bottom Line: By starting the office leasing process two years prior to the Client’s existing lease expiries, a relocation option in an ideal location was secured for a 10-year term in a timely manner.
Summary
Overall, businesses are grappling with how to provide their employees with a work environment that is safe and that encourages productivity and wellbeing. The current office landscape offers opportunities as we see a bifurcation between a flight-to-quality and, in some cases, significant vacancies.
As the office asset class slowly recovers, negotiations are taking place regarding existing leases and moves made to relocate, renew, or consolidate. There has never been a better time to explore your options and see if you can secure a better rate, a higher quality space, or impactful inducements (or all three) to improve your business’ operations.
For guidance on how to leverage this strategy, or for an expert opinion on your current situation, please contact us.
Office Leasing Services best practices, local expertise, and market intelligence across North America
Lee & Associates Office Leasing Services – Our Office Leasing specialty practice provides customers with a full range of commercial real estate services required for corporate and small- to medium-business tenants and landlords in the Greater Toronto Area and Southern Ontario.
An unprecedented demographic shift in the workforce has business owners rethinking workspace design to attract the workers that will help their businesses grow and thrive. The office has become a home away from home, a place to collaborate and a place to create. Our office specialists have the experience and knowledge to help you navigate this changing world, including implementing new workplace modifications and guidelines to adjust post-pandemic.
It’s all about the data – and your options! In order to make timely decisions, tenants and landlords require up-to-date market data, and the compilation of recent comparative deal information, overlayed on existing availability and inventory. Lee & Associates will help you make the most informed decision. We invest local expertise, research capabilities, and marketing experience to ensure your office leasing strategy is executed on plan and on budget.
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