Is your lease ending soon? Are you facing uncertainty when it comes to office space decisions? It’s no understatement to say that the commercial real estate market has been highly irregular in recent years. Many commercial tenants are wondering what’s next and what they can do to position themselves for success and stability. Continue reading to learn more about the Vancouver commercial real estate market, how to approach the end of a lease, and how to successfully plan your office space needs for 2023.
Careful considerations for commercial tenants
In light of hybrid and remote working arrangements, businesses are carefully considering their future office space needs. In recent years, we have seen more companies move away from the office to the home through varied work modalities. With this newfound flexibility, workers no longer want to be in the office full-time. The question is now: Should I invest in my office space, and if so, what is the best course of action?
It is critical to note that many companies that offer hybrid and remote jobs still require office spaces for teams to have a space to connect, interact, collaborate, and have a sense of belonging. So, while some may interpret this as the end of commercial real estate, the truth is that most companies are not going anywhere, despite the record-high number of employees working from home. Let’s take a closer look at the Vancouver commercial real estate market to understand better what’s going on.
A look into Vancouver’s commercial real estate market
The real estate market in The Greater Vancouver Area (GVA) saw a positive absorption of several thousand square feet, with each of the three submarkets, downtown, midtown, and suburban, also seeing positive absorption. A report from Colliers states that
“The technology sector remains the most active industry in the GVA office leasing market, standing for 34% of tracked tenant leasing demand. Additionally, the healthcare and professional services sectors saw a rapid increase in the amounts of space being sought – growing from 3% and 4% in Q2 2022 to 21% and 23% in Q3 2022, respectively.”
Overall, the market remains stable as we move towards a post-pandemic world. When companies understand their long-term vision and develop a real estate strategy based on their business and staff goals, there is less uncertainty in office space planning.
Understand your team and their needs
It is critical to be prepared for the end of a commercial lease, particularly in uncertain times. When approaching the end of a lease, you must be incredibly careful in your decision. Before making any decisions about moving, renovating, relocating, or refreshing space, a thorough examination of a company’s business and people strategy is needed.
The key is for businesses to study their team and ensure that they understand staff personas in relation to their needs to plan and develop their office. After conducting a study and gaining a better understanding, a workplace strategy can be developed that supplies an accurate estimate of the space needed and the best areas for your team. By exploring and understanding your team and their needs, you prove that culture and employee experience are more important than a lease. It is critical to consider the impact on humans rather than space and to prioritize the human element.
Based on the information gathered through studying your team, companies can clearly understand the office they need, not just what they think they need. This will help resolve uncertainty about decisions for office space needs. Once you clearly understand your requirements, you can begin the negotiation process and find the workplace for your company.
Work out an effective timeline
It is highly essential to allow enough time to make lease-end arrangements and plan for the next steps. In the event you end up relocating, you must ensure there is enough time to find a new space and coordinate everything necessary for relocation. Companies that prepare in advance are better equipped to make office space decisions. Just how much time is appropriate? You must allow enough time to plan, find space, negotiate a lease, design and build the space, and transfer all your services (tech, equipment, internet). Additionally, you need enough time to plan your move so that there is a smooth transition and no negative effects on your business operations.
A company looking for 1-2 floors in a building should start planning for 18 months (about one and a half years) before their current lease expires. If a company occupies and is looking for three or more continuous floors, it must start talking and making decisions 36 months (about three years) before the lease expires. If you leave the office space decision to the last minute, it can get complicated for property owners to give you continuous floors or good deals on tenant improvement rates.
Office space needs for hybrid offices
It can be challenging to figure out how much office space is needed for hybrid work models. Companies can research their employees to figure out what they need in terms of space, but how can they be sure that the space is suitable for hybrid work models in which not all employees are present all at once?
When looking at hybrid space users, base it off a 3-day work week or a 60% occupancy rate. Assume that employees will come into the office three days a week and ensure adequate space for everyone. Companies who base their office space needs on a 2-day work week or 40% occupancy rate will lack office space when the team is having an event, lunch and learn, or an entire team meeting. Having an office equipped to hold more staff gives the company more flexibility. It is better to have more space predicted than less. If you find yourself with more space, subleasing is an excellent option. However, having too little space can be challenging to organize and plan full team meetings and events, which can harm a company’s culture.
At Aura, we are here to help with a full range of services to ensure that your final office space meets all of your expectations. We understand the end of a lease can be stressful; Contact Us to see how we can help.