On October 16th, 2023, Aura partnered with TenantTalks to host The TenantTalks Summit 2023: Maximizing the In-person Employee Experience. This event featured two panel discussions and a commercial office expo. The event’s first panel featured prominent Vancouver commercial real estate professionals who discussed the changing dynamics of the commercial real estate market, vacancy rates, and initiatives employed by landlords to improve the workplace experience.
On our panel today, we have:
- Jason Kiselbach, Managing Director of Commercial Real Estate in British Columbia for CBRE. CBRE is a global leader in real estate services and investments.
- Ashley Chandler, Senior Manager of Programming and Events for Vancouver and Seattle at Hudson Pacific Properties (HPP). HPP is a publicly traded real estate investment trust based in LA and up the West Coast that acquired The Bentall Centre in 2019.
- Andrew Dickson, Director of Leasing at Oxford Properties. Oxford is a ninety-billion-dollar business wholly owned by the Canadian Pension Fund. Oxford Properties owns seven office towers in Vancouver, equalling two million square feet.
- Elizabeth Westgate, Director of Strategic Initiatives at Cadillac Fairview (CF). CF is one of the largest owners, operators and developers of best-in-class office, retail, and residential buildings, managing around seventeen million square feet of office across Canada.
Key trends and challenges shaping the commercial real estate industry
Vancouver leads the RTO in Canada
The commercial real estate industry is undergoing a dynamic transformation, influenced by various key trends and challenges. At the forefront of these trends, as highlighted by both Ashley Chandler and Elizabeth Westgate, is Vancouver’s prominent position as a leader in Canada’s return-to-office (RTO) efforts. In contrast, eastern markets such as Toronto and Montreal have been more laggard in their RTO progress. Nonetheless, research and data highlight a steady state across Canada, seeing a continual increase in office utilization. This resurgence may be attributed to stricter RTO mandates or the organic shift in people’s behaviours as the pandemic’s impact gradually recedes. Nevertheless, one thing remains clear: employees are consistently gravitating back to the office.
Increased demand for prime-located CBD, Class A office space and amenities
The hybrid work environment has accelerated pre-existing trends, such as the flight to quality, with an increased demand for prime CBD, class A office spaces and associated amenities. These developments reflect the changing dynamics in the commercial real estate industry, facing several challenges, from adapting to new working models to navigating high interest rates, recessionary concerns, and rising construction costs. In this evolving landscape, buildings must be fully operating ecosystems, offering curated retailers, dining options, fitness centers, and a diverse array of programs. Amenities and offerings must add value to tenants and meet the demands of the modern workforce. Tenants are paying rent; as landlords, it is their duty to provide value.
A concentrated effort to optimize buildings for the employee experience
One of the industry’s top priorities and critical challenges is enhancing the employee experience from when individuals enter the building to when they leave at the end of the day. More tenants are making real estate decisions based on the alignment of values and culture, as well as amenities and programming. To meet these demands, landlords are making a concentrated effort to make the office building more appealing and accommodating for employees. Continue reading to learn more about Vancouver landlords’ specific initiatives to improve the workplace experience.
Vacancy rates in Vancouver- What this means for tenants
The office vacancy rate in downtown Vancouver continues to increase due to the ongoing impacts of flexible work, concerns of an impending recession, and the influx of new office space. In the past, low vacancy environments compressed Vancouver; businesses had no opportunities to grow or consolidate. However, as the vacancy rates increase, companies have more options.
The current vacancy rate in Vancouver downtown hovers at approximately 12-13%, marking a significant shift from the historical levels of 3% or lower.
In 2019, Vancouver’s market had a staggeringly low vacancy rate of just 2%. Tenants faced limited options, often feeling pressured into signing deals that did not necessarily serve their best interests. The market was far from ideal for both landlords and tenants. However, the landscape has shifted, and today, we find a more balanced market with higher vacancy rates. Andrew Dickson from Oxford Properties notes that this change offers commercial tenants a unique advantage. With increased options, companies can secure the right space, obtain favourable terms, and customize their workspace to align with their corporate culture. This transition presents a promising shift for landlords and tenants in the commercial real estate market.
“It is a great time to be a tenant in the Vancouver market. There has not been a time when tenants have had as much good quality choice as now.”
Andrew Dickson, Oxford Properties
Strategic initiatives to improve the employee experience
Commercial landlords are actively pursuing strategic initiatives that reflect a vision for the future of commercial real estate in the Vancouver region. Oxford Properties, for example, has been committed to an Environment, Social, and Governance (ESG) approach focusing on sustainability and carbon neutrality. Their recent accomplishment of delivering Canada’s first carbon-neutral office tower, The Stack, underscores their dedication to this initiative. This commitment to environmental responsibility is aligned with their long-term vision for a more eco-conscious and sustainable approach to commercial real estate.
Similarly, Cadillac Fairview places the tenant experience at the core of its strategic initiatives. Their emphasis on creating meaningful spaces that cater to tenants’ needs is exemplified by their focus on “AAA” offerings—amenities, aesthetics, and activations. By providing attractive and functional spaces with appealing amenities, they aim to enhance the overall experience for tenants. Additionally, their approach to integrating smart technology into fitness facilities and creating outdoor terraces and shared spaces aligns with current trends. Furthermore, this reflects an effort to foster a sense of community and well-being among tenants. Their decision to hire a manager of programming and events for Vancouver emphasizes the importance of year-round activation and community-building.
Ashley Chandler, Senior Manager of Programming and Events at HPP, is keenly aware of the pivotal role that amenities and activations play in enhancing the workplace experience. In her position, she has introduced a range of initiatives that have transformed the built space into a dynamic part of the community. HPP has made the Bentall Centre dog-friendly and introduced pet-centered amenities. Their wellness studio, which often collaborates with local fitness and wellness experts, showcases a commitment to the holistic well-being of tenants and the local community. Furthermore, their engagement with local charities, like the fundraiser for Foundry, demonstrates a corporate responsibility that aligns with their vision for a socially conscious and community-oriented future in commercial real estate.
Overall, these strategic initiatives reveal a shared vision among commercial landlords in Vancouver—to create sustainable, tenant-centric, and community-driven environments that cater to the evolving demands and values of the modern workforce.
How are landlords adapting to meet the evolving demands of tenants?
As employees increasingly seek enhanced workplace experiences, companies are diligently redefining their workspaces to meet the evolving needs of this dynamic workforce. It is critical to note that it is not solely the employers who bear this responsibility; landlords also play a pivotal role in shaping the work environment. Vancouver landlords are proactively taking steps to align their properties with the evolving demands of today’s workforce, supporting companies with a streamlined return to the office experience.
To better support companies’ landlords adapting their commercial properties to cater to the evolving needs of tenants. HPP, for instance, is creating multifunctional spaces within their buildings. For example, the lobby coffee shop provides employees with a casual meeting spot, offering a refreshing departure from the traditional office setting. Additionally, the property boasts a fully licensed, adaptable meeting space suitable for catered lunch meetings or networking happy hours. Furthermore, this space is also ideal for hosting holiday parties, granting tenants exclusive access to an all-in-one event venue right within their office building.
Oxford Properties understands the need for flexibility in an era characterized by unpredictability and uncertainty. Tenants are struggling to make long-term real estate decisions due to needing more clarification about their space requirements for the next 5-10 years. In response to the current uncertain climate, landlords are adapting their leasing approaches by emphasizing collaboration with tenants. They provide the flexibility needed to accommodate fluctuations in size, demonstrating a commitment to sustaining a positive and mutually advantageous tenant-landlord relationship. This shift towards partnership rather than strict negotiations reflects the shared experience of navigating the challenges posed by the pandemic. It represents a new era of commercial real estate in which flexibility and cooperation between landlords and tenants are central to creating dynamic, adaptable, and supportive spaces.
“What happened through the pandemic is we’re all seeing we’re in this together. We were all in the pandemic together. As we go forward in this uncertain world, what used to be negotiations are now becoming partnerships.”
-Rocky Ozaki, The NoW of Work
What are tenants asking for, and how are buildings contributing to placemaking and city building?
Commercial tenants are increasingly vocal about their expectations for workspace offerings, and these insights drive building improvements, fostering placemaking and city building. Here are what our panellists had to say about what their tenants are asking for:
According to a survey conducted by Cadillac Fairview, which gained ten thousand respondents across Canada, here are things that are top of mind for tenants:
- On-site Gym Facilities: A desire for fitness amenities, including gym facilities and fitness classes.
- More Food and Beverage Options: Access to coffee shops and bars for social gatherings, lunches, dinners, and extended social activities. More affordable food choices to counter the higher costs of working in the office compared to home.
- Expanded Common Areas: More outdoor spaces, patios, and social dining areas to encourage collaboration and interaction.
CBRE’s global occupier survey found that within the workspace, employees find these areas critical:
- Shared Meeting Spaces: Areas for collaborative gatherings.
- Flexible Open Space: Versatile workspaces to adapt to evolving needs.
- Connected Tech and Building Apps: Integration of technology to enhance the workspace.
- Indoor Air Quality: A focus on healthy and comfortable indoor environments.
Oxford Properties and HPP have been inspired by the hospitality sector, enhancing the office lobby experience by renovating spaces and hosting initiatives within the building. Oxford Properties often holds galleries and exhibits in buildings like MNP Tower, transforming them into vibrant and inviting spaces. HPP has developed a temporary leasing program for pop-ups and short-term retail leases to have a revolving door of initiatives to provide tenants with great experiences continually. HPP has introduced a temporary leasing program tailored for pop-up shops and short-term retail leases, ensuring a consistent flow of initiatives that offer tenants exceptional experiences. Moreover, these improvements address tenant desires, contributing to placemaking and creating more vibrant, dynamic city environments.
Thank you for attending the TenantTalks Summit 2023
The overarching focus of the TenantTalks Summit centred on enhancing the in-office employee experience. We sincerely appreciate our distinguished panellists and attendees for investing their valuable time and insights, shedding light on how landlords are actively shaping the workplace environment through strategic initiatives, facility enhancements, and tailored amenities.
We extend our gratitude for your contributions to this enriching learning experience and invite you to join us for further insightful discussions at our next event. We look forward to seeing you there!