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Demand for Vancouver office space from tech sector showing signs of resurgence and urgency

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At a recent meeting in Mount Pleasant, an update from Provincial Health Officer Dr. Bonnie Henry came through a client’s phone. It would be safe for companies to head fully back to the office as early as September, according to B.C.’s restart plan. The client felt a pang of panic. Their company – a tech firm – had gone through a pandemic growth spurt and now had more people than space. “I need more office space,” they said.

This client's sense of urgency is not isolated as many companies — especially in tech and the knowledge economy — have been hiring and expanding during the remote work revolution. Vancouver’s urban office market is poised for resiliency as companies jostle for space in preparation for what we can expect to be a robust return-to-office movement in the coming weeks and months – but there are questions for both employers and employees that remain unanswered as some of us approach this return with excitement and purpose, while others balk at the thought of abandoning their remote working routines.

 

Tech driving resurgence in demand for office space

Vancouver’s office vacancy rates remain the lowest in the country at 6.5% compared to the national rate of 12.1%, according to Colliers’ Q2 Market Snapshot. As the pandemic hopefully fades in British Columbia, that rate will likely fall through the remainder of 2021 as companies return to an office environment, right-size their spaces, and expand to accommodate new business. We’re seeing plenty of demand from tenants. In fact, recent months have represented one of the busiest periods for office leasing enquiries and activities in Vancouver in the last two decades.

Through this surge in activity, technology companies have been driving the bus, accounting for the majority of office leasing action in Vancouver’s core markets like Downtown and Mount Pleasant. Evidence of this is Electronic Arts just leasing 120,000 square feet in MEC’s former head office building on Great Northern Way.

During the pandemic, while certain industries struggled or were shut down entirely, demand for content, products and services such as video games, e-commerce tools, digital services and online learning programs experienced unprecedented demand. To meet this demand, many tech companies had to rapidly scale up their workforce and hired more during the pandemic than they ever had before. As many of these companies prepare for a return to office, or approach a hybrid work situation, many will need more office space.

In the second quarter of this year, tech companies represented 61% of the demand Colliers saw for Vancouver office space, according to our data. Anecdotally, that number could be as high as 80%. Vancouver has attracted global attention and has become the city of choice for many growing local and international tech companies, and as borders begin to open and tech companies continue to grow, the demand for tech office space in Vancouver’s urban markets could get supercharged.

 

For the first time, there is no trend

One of the most interesting trends when it comes to the return to office is that there is no trend. It’s tough to know exactly where the pandemic is heading and how that will affect business and demand for workspace. Also, many businesses are now choosing differing or various return-to-office scenarios without knowing which ones will be the most successful. Some are choosing to be in-person organizations, while others are offering hybrid or fully remote working arrangements.

Ensuring there is a balance between productivity and employee well-being once we return to the office is a top priority for many employers. As a result, the decision-making power is shifting hands. Instead of the CEO, CFO or CTO being the primary decision-makers as it was in the past, Human Resources/People Services teams — and employees themselves — are increasingly guiding decisions about how, if and when we return to the office.

Decisions about the future of work will prove to be part of a fundamental change that could place more power in the hands of employees while creating tensions over opinions on productivity, visibility and worker location, and disordering how companies build and nurture a sense of team culture.

We know the workplace is changing, but we don’t know just how transformative this period will be.

 

Advantages of being in the office becoming apparent as broader picture remains unclear

The process of returning to the office will be complicated and haphazard and will depend, of course, on local factors. A year-and-a-half into the pandemic, many of the world's financial centres continue to struggle to get employees back to their offices, according to mobility data from Google.

The data, provided within the last month, shows that workplace activity in London, New York and San Francisco is still half of normal levels. Concerns over the highly contagious Delta variant could continue to delay this process.

As health and safety slowly fade as the main considerations over working in the office, or not, the fact remains that the pandemic has encouraged many workers to re-evaluate their lifestyle needs, including where they work. Although some may want to continue working remotely beyond the pandemic, employers and employees have noted that visibility and connecting with one another are important.

The past year has taught us that forming relationships remotely is just not the same as meeting face to face, and the in-person part of work is still important to many organizations. Innovation and collaboration often happen organically when we bump into one another or gather before or after meetings. In-person interactions also facilitate building and maintaining relationships, both with clients and between colleagues.

Equity, diversity and inclusion has been negatively impacted with work from home as we’ve learnt that a physical office space can be accretive in this regard. A physical space brings people from diverse backgrounds and experience together to learn from one another, which we haven’t seen for 18 months.

 

What employees should be asking themselves

The pandemic has shifted our lens in terms of what we value, and now is the time for some serious reflection for workers. Do you feel safe returning to your office environment, and if not, what needs to be done about that by your employer? It’s becoming clear that some companies don’t yet have the appropriate response to these concerns.

Employees should also be thinking deeply about what drives their sense of fulfillment; what's most important to you in life?

If family, for instance, is the most important thing and your employer allows you to work from home, then you might feel that remote work is more attractive, even if that means forgoing visibility and acknowledgement in the company, and upward mobility that comes along with that regular presence.

If you're early on in your career and value career acceleration, it's important to recognize that your competitive advantage is most likely linked to being in the office and by being active in social and professional circles. We know that interacting with people face-to-face will always drive business growth in ways that Zoom calls never will.

 

What employers should be asking themselves

If your goal as a business is productivity and profitability — and that seems like a given — then what steps can you take to encourage your staff to return to the office in a way that serves purpose, function and enjoyment

Part of that is having a plan in place to ensure that people feel safe and healthy while also acknowledging that business has become people-centric, and talent is increasingly mobile and restless.

Companies must now be searching for a balance between keeping people happy and inspired, while ensuring they are productive and maximizing company profitability.

The extent to which all the above is true is about to become much more apparent to all of us. Meanwhile, a lot of these concerns and complications will work themselves out over time as we settle into a new rhythm and the markets and economies of the world settle down.

But for now, it’s clear that pent-up demand for office, coupled with a rapidly expanding tech sector, has Vancouver’s office market showing signs of resilience and urgency as companies seek to right-size their spaces and welcome workers back to the office.

Colin Scarlett is an Executive Vice-President with Colliers in Vancouver who specializes in helping technology companies with their search for space.


Pour plus d’informations, veuillez contacter:

Colin Scarlett

Executive Vice President | Personal Real Estate Corporation

Vancouver - Rogers Tower

Colin works exclusively with businesses assisting them in finding real estate solutions for their business challenges. This business focused approach has enabled him to act as an unbiased Advisor providing business driven real estate solutions to some of Metro Vancouver's largest companies.  Colin is consistently Colliers' Vancouver's top Advisor representing occupiers of office space and is the only Vancouver member of Colliers' global Occupier Advisors which is a small group of top Advisors who exclusively assist occupiers of office space. 

Colin is one of five people on the National Advisory Board advising the Canadian CEO on key national business issues, is a regular faculty member at Colliers University in the Netherlands and was awarded the Business in Vancouver Top Forty under 40 Award.

Since 1996, Colin has completed assignments totaling over 5 million square feet representing more than $1.4 billion of transactions. He is most noted for his genuine approach, creativity and service commitment to his clients.

Representative projects include:

  • IWG Group - Regus/Spaces  -  Multiple projects totalling over 500,000 SF
  • Fortinet - 282,000 SF
  • McCarthy Tetrault LLP  -  82,000 SF
  • UBC Robson Square Campus  -  81,397 SF
  • Farris, Vaughan, Wills & Murphy LLP  -  67,369 SF
  • Ernst & Young  -  66,510 SF
  • Immigrant Services Society  -  54,620 SF
  • Miller Thomson LLP - 48,000 SF
  • Gowling WLG  -  43,000 SF
  • Relic/SEGA - 43,000 SF
  • Technicolor/MPC  -  40,951 SF
  • Harper Grey LLP - 40,000 SF
  • Nexon Publishing  -  37,179 SF
  • Microsoft  -  37,096 SF

Colin works with technology firms, law firms and other professional services firms.

 

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