By Alain Rivere of CBRE
Choosing the right office space for your business is an incredibly important decision. Location, size, style, price and features all play a part in determining whether a commercial space complements your day-to-day operations, your company’s future roadmap and most importantly your brand and culture. The VRARA Vancouver has teamed up with Alain Rivere from The High Technology Facilities Group of CBRE, to offer advice to companies in the tech, production and VR/AR industry of the available commercial real estate options in Vancouver. With coworking spaces growing in our booming technology ecosystem, finding a suitable spot can seem daunting, so we’ve broken down the key differentiators to help you find your perfect match!
In today’s Deep Dive we’ll be delving into Vancouver’s space opportunities for StartUp companies that not only provide ample space for a growing company, and that also promote incubation, education, community and support.
Coworking: Global Vs Local Spaces - Which will best suit my business goals?
Global Co-Working Space
An explosion of co-working spaces in the Vancouver downtown core now gives small (and large) tenants a wide range of options of flexible, pay-as-you go, think-tank work environments. These options include larger international brands like WeWork, Spaces, Regus, which have large spaces in large office buildings and provide full-service amenities in today’s leading office design. They offer private offices for single individuals, up to 20 people or up to a full floor, basically no maximum size. The spaces are built and furnished and the snacks, coffee machines and kegs are stocked. However these beautifully designed, furnished, turn-key solutions do come at a premium price tag.
Local Co-Working Spaces
The local co-working companies are also benefiting from the growing demand for flexible workspace solutions. They vary in size, location, amenities and price. There are larger spaces run by companies like The Profile and The Network Hub, who cater to all businesses, with a focus on the startup community. Other co-working spaces are operated by incubator companies that have a specific focus on what types of companies they cater to, for example Launch Academy is focused on incubating local startups in tech, and recently put space aside specifically for the VR/AR sector and another area for cannabis-tech. This type of focus will continue to evolve as new industries and technologies emerge. In addition, The Cube in Railtown opened in 2017 to provide a user friendly space for VR/AR companies. These are great spaces in character boutique office buildings, offering a plug-and-play, furnished and flexible workspace solution, at a price well below what the bigger players charge.
Key Benefits to Co-Working:
Flexible lease terms (month to month, 6 month, 12 month and longer).
Community and networking
Events, Workshops and Investor relations
Additional membership benefits: meeting spaces, access to other locations (globally and locally), beer and wine on tap, snacks and more.
While co-working offers amazing benefits that a private office does not, they do have their challenges. Here are a few things to consider:
More noise, interruptions and overall distractions.
Challenge in booking meeting rooms and call rooms.
Lack of privacy
Branding and culture challenges, lack of ability to create your own identity
Overall, there are many co-working options to choose from, and a company should carefully audit its immediate, short term and long term needs as best it can. As your team is still small, your board, management, senior staff or even your full company team should be consulted to understand what your needs are and then compare to what is offered in the market that best meets those needs. We also recommend that any company evaluate their needs with a broker, as they can also assist in negotiating better terms with co-working options.
Private Office Spaces
If co-working is not the option you are looking for and you prefer your own Private Office suite, there are a broad range of options that can be summarized in two: Short-Term and Long-Term lease commitments. The pros/cons of each are listed below to help you make sense of what is most appropriate for you.
Before digging into this, it is important to understand the state of the Vancouver Office Leasing Market:
Demand and Vacancy: Vancouver has witnessed strong tenant demand for office space for the past 2 years, bringing vacancy to a near all-time low of 4.5% in the downtown core, 1.5% in Yaletown and 3% in Gastown.
Rental Rates: Few available spaces means landlords have the upper hand and they have been steadily increasing rents throughout 2018. This is expected to continue into 2019.
New supply: New buildings are under construction, however the next few buildings are not expected to have any significant impact on availability until late 2020 and 2021.
Tips to a successful lease negotiations: start your search early, hire an experienced broker, evaluate all aspects of your needs, plan for future growth (if able), be “market-ready” so when the right space comes along you can secure it quickly. Be prepared for competition and to step-up (if needed), as multiple offer scenarios can occur.
Private - Short-Term Office Lease (6 - 36 months)
These opportunities include those ranging from 6-months to 3-year commitments for a dedicated private office suite. Typically these are short term subleases from tenants with that no longer need their space. Most landlords look for a (minimum) 3 year lease term, so finding a tenant looking to exit their lease early are great opportunities.
Pros: branding and “make-it-your-own” capabilities, security and privacy, limited distractions, controlling your space, positive optics for investors/clients and for hiring. Sublease opportunities may allow for extra savings in free furniture and existing infrastructure to minimize set up costs.
Cons: Limited number of available spaces to accommodate this size of office spaces (800 - 2,000 SF). Lease term is set, limited flexibility to expand/contract. Upfront set up costs, i.e: renovations and/or furniture. Required to manage day to day office items such as (printers, internet, coffee etc). Limited flexibility/growth potential, however there are some ways to workaround this with the right lease.
Private - Long-Term Office Lease (36 - 60 months or longer)
These types of space opportunities range from 3 to 5 years, and longer (if desired), for your own dedicated office. Typically these are leases negotiated directly with the landlord, however sublease opportunities may be available too (possibly with discounted rents!).
Pros: In addition to most benefits shown above, long-term leases provide security in locking in rental rates for longer, ability to negotiate stronger lease terms, including: free rent, improvement allowances and more. Financial set up costs are spread out over a longer period of your lease.
Cons: long term leases limit growth flexibility, subleasing may be required (this could be an asset, upfront setup costs (i.e: potential renovations and furniture), business goals may not align with long leases (i.e: investors want easy liquidity for potential sale). That said, there are creative solutions to many of these issues.
As a starting point, if you’re not sure which option is right for you? Here are some key questions to ask yourself and your team:
How long before we grow beyond 12 - 15 people?
Are we willing to stay in a co-working space long term, does it drive innovation / productivity, does it fit our culture and brand?
What is the 1 - 2 year goal and what is our budget for space for this period?
What type of space do we really need? (quiet, private, meeting room space?? And does the co-working solution offer these needs?
Are clients, investors or other important contacts visiting us?
A thorough analysis of all these questions (and possibly more), should help to give you and your executive team a better understanding of which option is best and give you the confidence to move forward with your decision. It is worth putting in this work upfront to make sure you get it right the first time.
To get familiar with what’s happening in the office market, which tech companies are moving, and other relevant information on culture, hiring or attracting, startup community and workspace design and innovations, we recommend following Alain Rivere’s Linkedin, visiting The HTFG website, and subscribing to his team’s Quarterly Newsletter here.