Once the summer ends and the kids go back to school the commercial real estate market typically picks up again. With that in mind, I’m going to focus on the following to-do list until we hit our next real break in December. Time to hit the phones.
My #CRE to-do list:
• Have a written 1, 5,and 10 year life vision
• Give “WOW” client service
• Keep involved
• Prospect Daily
• Keep your pipeline full
• Follow up
• Follow through
• Use a marketing calendar
• Set goals- review daily, weekly, monthly, quarterly
• Time block
• Work only with ideal clients
• Give referrals
• Ask for referrals
• Continuing education
• Have a Coach
• Don’t burn out
• Take vacations
• Avoid interruptions
• Have life balance
• Hang out with other successful professionals
• Avoid losers, whiners, complainers
• Read trade journals
• Read your local newspaper
• Review this outline regularly
• Work on your business, not just in it
• Attend workshops
• Improve your skills
• Join professional organizations
Do you have anything to add? Let’s hear it!
Why today’s real estate choices will affect your future business.
The next evolution of the workplace is underway. The office now plays a vital role in a company’s ability to attract and retain talent, breed innovation and do more with less.
Traditionally, employees were restricted to a physical office, but today, the office can be accessed through the palm of your hands. This paradigm shift is ongoing and change is inevitable for companies to stay competitive. In the next decade, savvy business leaders will be focused on three connected factors driving change in the workplace:
Talent Attraction and Retention
Productivity: Innovation Through Collaboration
Technology: Doing More With Less
Talent Attraction & Retention
Gen Y: Get Ready, They’re Here
Gen Y, Millennials, Echo Boomers – no matter what you call them, most agree that they are a force to be reckoned with. In less than a decade, they will make up nearly half of Canada’s workforce and are already driving a major shift in ideas as to how and where we work.
Gen Y (most commonly referred to those born between 1981 and 2000) represent the future of our workforce. With a preference for flexible hours, and a need for work-life balance, Gen Y can sometimes be perceived as lazy, unprofessional and having a sense of entitlement. However, reality has shown they are dedicated and hard-working, with the majority of them growing up using technology and willing to work anytime and anywhere.
In a recent survey conducted by Odgers Berndtson, only 41 percent of global executives said they are prepared for the cultural changes that will take place as these generations replace current leaders. However, the majority of the respondents agreed that their organizations are willing to make the necessary changes in order to attract the best talent.1
Since 2011, Canada has seen more employees leaving the workforce than entering it,2 which takes the “war for talent” to a whole new level. Understanding what motivates Gen Y, and putting the framework in place to deliver on it, will give companies a considerable edge over their competition.
In terms of the workplace, Gen Y has different needs than previous generations:
Gen Y choose where they want to live, and then, where they want to work. Often choosing not to own a vehicle, easily-accessible locations are paramount to this generation. Over the last few years, several companies have relocated to more central areas near transit hubs, including Telus, Coca-Cola, and Google, all opening additional offices or relocating their suburban offices to Downtown Toronto.
Gen Y value the independence and flexibility of working where and when they choose, both in and out of the office.
Gen Y have grown up with a constant connection to others through social media and other outlets. They value a workplace that enables open collaboration and social interaction.
Currently, many managers are trying to keep up with the workforce changes. With Baby Boomers, Gen X and Gen Y all in the workplace at the same time, and all with very different needs and expectations, the rate of change has been somewhat tempered by this clash of cultures. Considering Gen Y are already here, planning now for the future is critical.
Take Action: Profile your employees to understand generational composition. Employee surveys are a great tool to gather insight on wants and needs.
Innovation Through Collaboration
In the past, maximizing profits depended on the implementation of ‘systems’ and ‘stream-lined’ processes that got things done better, faster, and cheaper. Only recently have those ideas started to change. Employers have begun to realize that happy, healthy and stimulated employees and an improved office culture directly affect productivity, frequently leading to more innovation and ultimately to business growth.
Successful companies are now viewing real estate as more than just office space, realizing that having dynamic office space creates a competitive advantage. High-tech firms are making headlines with trendy workspaces that include mini-golf courses and video games scattered throughout the office. However, behind the fun and games, there are very sophisticated design principles at work to ensure that these offices not only support collaboration and creativity, but breed it. Research has shown that “the average worker only sits at their desk around 35 percent of the time,”4 leading to more emphasis being placed on communal areas including lounges, kitchens, brainstorming spots and even spaces designed to simply allow for casual interactions.
Take Action: Review departments and functions to determine which would benefit from specific workspaces to increase team collaboration, casual meetings, and multi-media conferencing.
Doing More With Less
Telecommuting (or teleworking) is a trend on the rise and although it doesn’t work for all companies, certain industries are benefitting from a large boost in productivity and reduced costs. In addition to the flexibility it offers employees, there are increased cost savings to the employer as well.
Advances in technology have allowed us to not only access files and documents from outside the four walls of the office, but to have face-to-face meetings on a national or international basis with virtual meeting software or even apps on your smart phone. While nothing will ever replace the in-person feel, the cost and time savings in using this technology are unquestionable.
In cases where employees work both remotely and on-site, hoteling stations can be arranged to make better use of a company’s floor plan, resulting in a smaller footprint per person in the office and allowing additional costs to be allocated to common area space.
Colliers projects that by 2018, square feet per employee bench-marks will fall as low as 145 square feet, compared to today’s average of 172 square feet per person. Despite a decrease in individual space requirements, the need for additional meeting rooms and common areas has kept the total amount of space required from plummeting.
Take Action: Technology enables mobility, mobility enables shared workspaces, and shared spaces result in a decrease in square footage per employee. Evaluate how current office space is being used to ensure maximum efficiency.
Business leaders today have a lot to consider when planning the future of their workplaces – how can they leverage real estate to act as a tool not only to attract and retain talent, but also as a means of boosting productivity and containing costs?
Individually, people, productivity, and technology are not driving change, but collectively, they have created a perfect storm. Real estate has gone beyond just bricks and mortar, and companies that are prepared to take action now will have the potential to accelerate their success.
For more information, please contact:
Shawna Rogowski – firstname.lastname@example.org
Chris Fyvie – email@example.com
1. Odgers Berndtson: “After the Baby Boomers – The Next Generation of Leadership,” 2012
2. Stats Canada, May 2011
3. Bill Haas, Haas Performance Consultants LLC, AAPEX Expo, 2012
4. WORKshift Canada: “The Bottom Line on Telework,” 2011, David Craig, Director, DEGW quoted.
5. Colliers International Research
What do you think?
Here is a great piece from a great designer that I work with here in Toronto.
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Today we see two primary drivers that are prompting business owners to contemplate these strategies:
Global & Regional Economic Conditions are driving the need for increased productivity to ensure that businesses remain profitable and competitive, often translating into a requirement for major capital investment in equipment and systems. Commercial Property, as an asset class, is in high demand from many types of investors, ranging from the largest pension funds, Real Estate Investment Trusts to private investors. Values are high and properly priced assets sell quickly, making this an excellent window in which to execute a sale. The slow growth and recessionary environment around the globe has created a challenging environment for companies across many sectors, particularly those engaged in exports. However, these circumstances have produced an ideal environment in which real estate thrives; assets are positioned as attractive investments reinforced by an ultra-low interest rate environment. Companies that require capital may determine that the equity tied up in a real estate asset could produce a higher return if invested into the core business. This is where a sale-leaseback can be an excellent approach. Employing this strategy allows the organization to extract capital from real estate, and re-deploy it where needed, without disrupting day-to-day operations. Where the owner wishes to dispose of the operating business and related property, the timing is also right for maximizing value.
Current commercial property market conditions in Canada are excellent and look to remain that way in the near term. Now is a great time to evaluate the sale-leaseback option and be poised to execute if the strategy fits, before commercial property market conditions begin to shift. As the Global economy recovers, a counter-intuitive pull-back in demand for Canadian real estate may occur, as other investment options could become more attractive and compete for capital.
Demographics indicate that many small to medium sized organizations are owned by baby boomers. These individuals are approaching retirement and will need to grapple with succession planning, or examine the disposition of their businesses. A sale-leaseback or complete disposition strategy may work very well given today’s market conditions and help the retiring owner maximize value of the real estate.
The sale-leaseback occurs when ownership in the operating business will not change; the original owner sells the property and at the same time, signs a lease agreement with the new property owner. The proceeds of the property sale are then available for use in the core business. In the case of a retiring, or soon-to-retire business owner; the property sale proceeds form a component of the owner’s retirement funds. In this approach, the owner monetizes the value of the property for their personal use and maintains ownership of the operating business.
Are conditions right?
Assessing the Sale-Leaseback Opportunity:
Before going too far down the road, it is important to perform an assessment of the opportunity. Marketability of the real estate, and the strength of the financial covenant the operating business can provide on a lease, should both be considered.
1) The real estate should be well located for its purpose. It should also be functional and well maintained by today’s standards. In simple terms, it needs to be marketable in the future to prospective tenants or purchasers as a part of the acquirer’s investment strategy.
2) The lease covenant provided by a business is the next major component. The financial strength and track record of an operating business, without the real estate asset on its balance sheet, will need to be healthy enough to provide comfort to both the prospective purchaser and potentially, the financial entity that underwrites the loan for acquisition.
FULL business DISPOSITION
In a complete sale of both the business and real estate, two different strategies may be employed.
1) When the acquiring business is larger and financially stronger than the original owner, it can be effective to sell the business first and subsequently sell the real estate.
This adds value to the property due to the financial strength of the new business which provides a stable tenancy and secure cash flow, making the property more attractive to investors.
2) Where the acquiring business is similar, or smaller in size than the original owner, it is prudent to have the real estate valued separately from the operating business to ensure that the property sells at full market value to either the acquiring business or to a third party. Often when the property and operating business are bundled, it is difficult to ascertain if full value has been realized for both assets.
This paper has touched on some of the drivers of sale-leaseback and related transactions that are currently creating interest for business owners. The ebb and flow of both financial and real estate markets will dictate strategy and timing, as well as warrant in-depth analysis for each asset in the context of its market and timing of the transaction. At present, the Canadian commercial property market is very strong. Careful monitoring of market dynamics will be important to optimize the results of any potential transaction.
Our hope is that this general overview will provide food for thought. Like all major financial and legal transactions, these strategies should be reviewed with tax and legal experts, as well as real estate advisors to ensure a prudent and strategically sound approach for your unique business and financial plans.
I asked one of my colleagues at a moving company to put this together.
Hopefully you find this useful if you are budgeting for an upcoming relocation!
Please note these are VERY rough estimates.
*FURNITURE MOVES (per # of employees)
1-24 – $350
25-49 – $300
50-99 – $280
100+ – $265
1-24 – $265
25-49 – $235
50-99 – $220
100+ – $210
# of employees (standard business use – 4 bins required per person)
1-24 – $110
25-49 – $60
50-99 – $50
100+ – $45
*Assumes a standard 2 week rental of move bins
*These rates are taken from the average of at at least 3 several similar sized moves we have performed over the last 2 years from different buildings originating and ending in the downtown area. (An internal move between floors and suites would create a reduced cost)
*A safe rule of thumb would be to add 15-20% if there is going to be stairs involved to get the furniture in or out of 1 of the buildings and 30-40% if stairs are at both the old and new location.
If someone is looking at buying new furniture and they are usually responsible for disposing/recycling of their old furniture left behind and they are probably looking at paying around 66% – 75% of the price it would cost to move the furniture anyway as it still has to be knockeddown, loaded, moved and offloaded somewhere + the client be responsible for landfill charges. (A lot of companies are surprised when we do a content and computer move into new furniture they have purchased and they haven’t taken into account they need to empty their old space and they end up having to pay more for their old furniture removal than their content/computer move)
Highlights of the Second Quarter 2013 Downtown Office Market include:
• The downtown market has seen an increase in demand for office space as shown in the steady decline in the vacancy rate from 4.2 percent to 4.0 percent since last quarter.
• Rental rates are effectively flat.
• There has been a marginal uptick in the number of sublets available.
• Quick absorption of new product in the downtown core has boosted developer confidence, resulting in the escalation in the number of developments moving into the construction phase before pre-leasing commitments reach the standard 60 percent. With roughly 5 million square feet of office space currently under construction in the downtown core and 17 projects in the planned/proposed phase, new supply could add a potential 14 million square feet to the downtown office inventory from 2015 to 2018.
Looking 12-18 months forward, we believe the marketplace will continue to remain tight, however, leasing activity is slowing and the sublet market is showing signs of activity. Tenant’s that are expanding or planning an office move should employ a thoughful strategic plan to contain occupancy costs. Considerations should include reviewing staff density within existing offices, a review of fixed operating costs charged by landlords and a relocation versus renewal plan that demonstrates the advantages of each scenario.
Please feel free to contact us for a detailed 2013 outlook to discuss your firms specific requirements.
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Please note the attached office space is not listed with OfficeSearchToronto.com but call us first at 416-643-3713 or email us here!
SEARCH for your own offices here!