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Everyone and their dog enjoying fancy office amenities
Patios for pooches, golf simulators and other upmarket perks have been added to Calgary's Class B and C buildings to attract tenants in a grim market
Special to The Globe and Mail

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Tuesday, October 16, 2018 – Page B6

Want Fido to spend the day under your desk at work? How about a nice workout across the hall on your lunch hour? Or take a break in the afternoon in a relaxing tenant-only lounge on your office tower's second floor?

Office space owners in Calgary, beset by a tough, high-vacancy market, are turning their attention to offering lifestyle amenities to set themselves apart from competitors. That includes not just the Class AAA towers, but B and C buildings, as well.

While real estate professionals believe the worst is over in the city's downtown market, vacancies in the second quarter were pegged by Colliers at still north of 26 per cent. Class B buildings were running at 37.9 per cent for combined headlease (original lease) and sublease.

In the forefront of the amenity trend is Aspen Properties. Its Class B, 30-storey Edison tower is the building often cited for the number of bells and whistles tenants receive for their lease buck.

The downtown building includes a club-quality gym, a basketball key on the top floor, a golf simulator, a bike-share program, a library and games lounge in the lobby, and conference rooms available for all tenants adjacent to a patio. And there's an open-air dog park on the third floor because canines are welcome at the Edison.

When Aspen Properties bought the 1980s-built Edison in 2015, deep in the midst of Calgary's oil-price-driven dip, the 450,000-square-foot tower was empty.

Greg Guatto, president and chief executive officer of Aspen, says the company knew it had to refurbish and reposition the tower.

"We knew we wanted to do something different and be unique and not compete directly with all the vacancy in the market," says Mr. Guatto.

The company, which has other buildings in Calgary's downtown and in Edmonton, drew on ideas gathered on a trip to Silicon Valley to create a building for tenants wanting to attract young and creative talent.

In addition to all the amenities, there is a community manager to co-ordinate events and foster a community feeling in the building.

The firm also has two floors of co-working space for small startups "if you want to lease space by the month, by the desk, if you will," says Mr. Guatto.

Rob Blackwell, Aspen's senior vice-president of investment and asset management, says the amenities haven't cost as much as one might think.

"We're building a little differently. You might have a stark white section of a lobby - we've got a library and soft seating. It doesn't really cost any more, it's just different. We turned a storage facility into a basketball court - the incremental cost isn't substantial. It's retooling and going about it in a different way." Mr. Blackwell says the building started out from zero 18 months ago and now has committed leases for 65 per cent of its space.

"At the end of the day we'll have a full tower and we'll lease out all that rentable area in the building so we'll be better off," says Mr. Blackwell.

Mr. Guatto adds that Aspen is rolling out similar amenities in its other Calgary buildings and in the Bell Tower and MNP Tower in Edmonton.

Aly Lalani, a Calgary-based executive vice-president with Colliers, says while Calgary has over the years been consistent with amenities offered in Class AAA office buildings, the need to differentiate from other competing space is accelerating their use in a wider array of towers.

"What you're seeing now is older B-class buildings and in some cases C-class buildings putting these amenities in when before they never really had to," he says.

"Tenant lounges are becoming more and more popular. They're the third addition to the amenity packages - fitness centres and conference centres are the first two. Now buildings are starting to add tenant lounges. What they are is a common area for all tenants to go to. You have to have an access card. The lounge area is often used for an informal meeting or you could have a function there," says Mr. Lalani.

While landlords are stepping up their game, some tenants are also demanding more, but the amount of flexibility a landlord is willing to offer depends on the size of the prospective tenant, says Mr. Lalani.

Only a few buildings are advertising themselves as dog friendly, for instance.

"A tenant that's 5,000 square feet can't go to the landlord and say I'm bringing my dog or it's a deal breaker," says Mr. Lalani.

Benevity, an online tech firm offering workplace giving, matching, volunteering and integrated grant management services, was big enough to push the envelope with its landlord, Remington Development Corp., to get dogs into its new space.

"Benevity's Calgary headquarters has been located in Remington's Meredith building since October, 2017. This was the fifth time in nine years that we had to move our Calgary headquarters into a larger space. We currently occupy the seventh, sixth and fourth floors of the building and are taking over the fifth floor in March," Melissa Skowron, places co-ordinator for Benevity, says in an e-mail.

She says Remington agreed to remove a no-dogs policy for the firm because dogs at the office were non-negotiable for Benevity.

Lloyd Suchet, the CEO of BOMA Calgary (the building owners and managers association), agrees that landlords downtown are more creative and aggressive about retaining tenants.

But the amenities aren't solely about vacancy, in his view.

"It also speaks to the shift Calgary is trying to make economically in terms of diversification," he says.

"The City of Calgary and Calgary Economic Development put a lot of focus on attracting new types of industries - really high tech and creative industries. We know that those companies tend to attract younger demographics. ... Those are the people who really are demanding those types of amenities."

And in a city with a sometimes brutal winter, downtown Calgary tenants also want a specific comfort amenity, adds Mr.


"Everyone wants to be on the Plus-15 [enclosed skywalk between buildings]. If you speak to folks in the leasing community they'll tell you Plus-15 connectivity will lead to higher rents."

The overstreet covered bridges on the second floor of many towers take a bit of work.

"There's a cost to it, for sure.

Technically it's the city right of way so the city owns the bridge.

There's some sort of maintenance agreement. You need to agree with the building adjacent on certain terms. It can be a bit tricky. But it attaches you to a huge network," says Mr. Suchet.


5.4% Biggest one-week gainer among REITS: Slate Retail

2.4% Biggest one-week gainer among real estate operating companies: Brookfield Real Estate Services 7.6% Biggest one-week decliner among REITs: BSR 7.1% Biggest one-week decliner among real estate operating companies: Dream Unlimited Corp.


Associated Graphic

Class A office towers are no longer the only buildings with enticing tenant treats, especially in Calgary where it's a buyer's market. A library and lounge in the lobby and a dog park on the third floor are a couple of the features at the Edison, a 30-storey Class B office.


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