office space

Finance sector strategizes office space amid digital era

Tuesday, January 10, 2017

The financial services sector will continue to be a key driver of office space demand in the long term, according to a report released at the end of 2016.

Technology is significantly influencing the finance sector. While building automation will effect jobs, risk management and compliance roles are growing. Banking and the new digital era: What’s next for Financial Services in Canada?, co-authored by GWL Realty Advisors and CBRE Limited (CBRE) delves into how firms are shifting towards offices that can be used as tools to attract and retain a new generation of top tech talent.

“In the digital era, banks, insurance firms and wealth managers are all set to look, feel and act more like technology firms,” says Ray Wong, head of research at CBRE Canada. “This means that financial services companies will increasingly need to hire new talent within software development, creative industries, digital media and data science. This type of talent is already in the highest demand, so it’s highly unlikely they will settle for working in a ‘cube-farm.’

Wong says this talent group wants a workplace that offers a variety of work settings and a sense of community that complements their “highly collaborative way of working.” Expect more investment in spaces that are flexible and focused on collaboration, sustainability and health and wellness.

Office locations

Financial institutions will open more satellite offices, incubators and innovation labs near universities and other technology hubs in up-and-coming tech and education clusters and smaller cities; however, the sector is expected to continue occupying a dominant position within Toronto’s office market.

Toronto currently houses half of all new job growth, with about 10,000 additional financial services jobs forecasted by 2020.

“This research re-affirms our long-term investment confidence in the Downtown Toronto office market, where Canada’s financial services sector is headquartered,” says Wendy Waters, senior director of Research Services & Strategy at GWL Realty Advisors. “Firms are incorporating new technologies and approaches and bringing in new types of employees to do so. They continue to need office space.”


Toronto is home to more than 60 of Canada’s approximately 100 known fintech firms that occupy about 260,000 square feet of office space in the city. Meanwhile, Waters points to smaller fintech firms that are “carving their own niches, or collaborating with banks,” resulting in a new type of office tenant.

“While it is not currently a major driver of office space, there are signs that it is poised for substantial growth,” adds Wong. “Venture capital funding is often correlated to office demand and Canadian fintech firms have attracted over $1 billion in funding since 2010.”

The report highlights the more balanced reality of fintech disruption. While some fintech companies compete with traditional financial institutions in core market segments, such as wealth management, payments and credit lending, others are more collaborative and provide new services.

“Financial services companies are increasingly looking and acting like technology companies who
happen to do banking or wealth management work,” adds Waters. “This will have implications for how we design and upgrade office buildings. As they plan their future office space needs, financial services tenants increasingly express a desire for similar amenities and features as technology companies.”

She says these amenities include fitness centres, end-of-trip commuting facilities, distinctive restaurants or coffee bars in the building, and private or bookable outdoor spaces like roof-top patios.”

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