A recent CBRE forecast for Atlantic Canada’s commercial real estate industry in 2020 predicts an increasing need for flexible space in a market where co-working has yet to be fully adopted compared to other parts of Canada.
“A realistic assessment of office tenant needs should include flexible workplace options, and local landlords will be forced to think outside the box in 2020,” said CBRE Atlantic Region Vice President Andrew Bergen. “Co-working is coming and it’s only a matter of when.”
Tech incubators in Halifax are producing expanding businesses in need of permanent office space. But these growing companies may not have the upfront capital to invest in a long-term office solution, or the traditional office model doesn’t fit with their culture.
The growth for scaling companies is also hard to predict. What may start out as a 1,200-square-foot workplace requirement in the first year may be a 12,000-square-foot requirement in five years.
“Locking into a long-term lease with significant upfront construction costs is not a favourable option for many companies today,” said Bergen. “The business case for a large co-working provider establishing a presence in Halifax should be taken seriously.”
Flexibility is now a fundamental part of negotiations and tenants and landlords are having to adjust. Square footage and price are not the only factors being considered when selecting a new location.
“A workplace that promotes company culture and lifestyle as a differentiator is a priority,” added Bergen. “A strategic real estate model tailored to embrace flexibility and attract and retain top talent will reduce turnover and overall costs, while accommodating future growth strategies.”
Retaining talent will be a key issue going into next year, reports CBRE. The population of Halifax is expanding at a faster rate than the Canadian average, growing 1.6 per cent in 2018. For the past three years, young people between 25 to 39 made up more than half of the city’s growth. The region has reportedly become accustomed to losing its skilled young workers, so the need to retain this talent will be imperative.