A few weeks ago, Bentall Kennedy published a report entitled Perspective on Real Estate (click here to download a free copy from the Bentall Kennedy website). Kudos to BK for making this report available to the general public. There’s a ton of useful information in the report, which is of interest to anyone who follows trends in the commercial real estate industry. Here are a few points that I found to be of interest:
- Firms are increasingly using their office space in a more efficient manner. The average square footage required per worker slipped from 225 square feet in 2010 to 176 square feet in 2012. As you would imagine, specific usage rates varies considerably depending on industry, from a low of about 130 square feet for call centres to a high of over 400 square feet for – you guessed it! – law firms. The implication for property managers is that they need to adjust their long-term planning to accommodate higher-density occupancy.
- The greatest regional deterioration in office market conditions is in Western Canada, particularly Calgary. Calgary when from a landlord’s market in 2012 to a tenant’s market as we enter 2014. According to the report, the uncertainty surrounding the energy sector has resulted in a large number of Calgary’s office tenants giving up space. According to the report, most regional markets in the West have moved to a tenants’ market, especially in the suburbs.
- Even though the demand for commercial space has softened somewhat, Canada is experiencing a very strong office development cycle. There is over 20 million square feet of space currently under construction, with over 65% taking place in major downtown markets. The current downtown development cycle is the strongest we’ve seen since the late 1980s. According to the report, the biggest difference between today’s growth and the previous boom is that “most (if not all) of the new downtown space today is being developed by large pension funds as opposed to merchant builders.”
This doesn’t even scratch the surface of the wealth of information included in the report. So be sure to download your free copy from the Bentall Kennedy website. You can then impress everyone with your extensive knowledge at the next BOMA function!