Tech companies competing to recruit and retain millennial employees are driving Vancouver’s office market, demanding downtown spaces with plenty of amenities. But high-tech tenant requirements are unique and do not always fit the ideal tenant profile, agents say.
For instance, despite the image of sprawling spaces with foosball tables and lounge seating, tech companies do not need more space per employee than traditional businesses.
“They need less,” says Robin Buntain, vice-president of office leasing for Avison Young. “Their per-square-foot density per person is less than a law firm because most of the people are in open workstations, so generally their work areas are pretty tight but then you have amenity space.” Collaborative areas and innovative arrangements can make a place look bigger, but they can pack in more tech workers than an equivalent space filled with cubicles and prestigious corner offices.
The tech boom is great in a downtown suffering the first double-digit office vacancies in a decade, but it comes with challenges, adds Colin Scarlett, executive vice-president of Colliers International in Vancouver. Tech companies want flexible leases because their staff teams tend to increase or contract more than other sectors.
“Their demands and requirements are diametrically opposed to a landlord’s requirements,” which require long-range planning, he says.
If they can’t offer flexibility, Scarlett suggests landlords sweeten their leases with “a more robust amenity package,” such as gym facilities, facilities for bikes, more diverse retail and food offerings that appeal to employees.
Studies show that local tech firms are putting more thought into quality space as a tenant recruitment tool.
Each year, CBRE surveys local tech CEOs about what they view as the most important things in recruiting employees. Last year, fewer than 20% cited real estate, says Kevin Nelson, CBRE senior vice-president. This year, more than half did.
“Millennials don’t anticipate owning their home, but they want to believe in the company they work for and they want to feel inspired by the space they’re in,” says Nelson.
The pressure is on because of major expansions by big tech firms that have swallowed up thousands of local workers.
“If Amazon comes into our city and hires 1,000 people and Microsoft doubles down and Sony doubles down and HootSuite is holding job fairs, all the other, smaller players are sitting there saying, Holy crow, I can’t recruit anyone right now,” says Nelson. “So I think we are finally playing the game that other cities are seeing.”
The tech scene has exploded in recent years, now employing more than 100,000 in B.C., mostly in Vancouver. The sector generates more than $23 billion in revenue and $15 billion in gross domestic product, and already occupies as much as one-third of the office space in downtown Vancouver.
Tech businesses are now moving up the real estate food chain, Nelson says. In some cases they are able to do this without increasing their rent because they downsizing, with less “me” space, more “we” space.
Tech employees are often working with what Nelson calls a “free-floating address.” Using laptops and headsets, they navigate throughout the office, or even offsite, collaborating in ad hoc “touchdown spots.” Filing cabinets disappear as everything is digitized. Where once a coffee station may have been hidden, it is now a focal point of the office as a casual meet up or work space.
Nelson’s colleague Blair Quinn, CBRE executive vice president, says transit is central in the lives of tech workers, and millennials generally.
“They don’t want to drive,” Quinn says. And the equation is simple: “The core is the best service area for transit and the suburban markets always suffered on transit.”
Once the location is nailed down, the amenities package heats up. Young workers are looking for more than a paycheque. “They’re looking for culture,” Quinn says. “They are looking for lots of free organic food, beers on Friday; they’re looking for a community.”
With talented employees enjoying the luxury of choosing the coolest work environment, companies – and landlords – are fighting for an edge.
Perhaps the edgiest tech office speculation is Vancouver’s former police station at 312 Main Street in the dodgy Downtown Eastside, considered Canada’s poorest and Vancouver’s slummiest postal code.
The city selected the shuttered 100,000-square-foot site as a potential tech hub two years ago and renovations started late in 2015. The city has already spent $1.1 million on upgrading the building, while the Vancity Community Foundation earmarked another $1.5 million for the project.
The foundation is serving as the project’s landlord, while the Vancouver Economic Commission (VEC) will monitor its economic impact and try to bring in investors and mentors. ”
