Quote:
Originally Posted by Stormer
And the fact is most of the tenants are vacating other buildings.
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The thing that is being ignored in all of this discussion is how standards change. Everyone is viewing the Saskatoon office space market as a matter of numbers, but anyone with a sense of history and retail/business growth will tell you that people don’t always go by the numbers. Here’s the issue that no one is considering.
Just how much Class A space in a major development has been created in Saskatoon recently? None. So there has been no taste for it.
Excuse the Corner Gas reference, but I think River Landing will move a lot of people into a new ‘wine bracket’. There are lots of people owning or managing firms who aren’t giving one bit of thought to being in nicer digs downtown. But just watch what happens...
Somebody goes to do business with someone who works in one of those towers, or has a buddy, or a wife, that does. And they go meet them for lunch one day and walk down and sit in the park at noon, or park underground when it’s minus 30 outside, and suddenly that old office in the industrial area, or that old building on the edge of the core that was always “good enough” suddenly isn’t anymore.
Who would have thought that Saskatoon could support high end luxury vehicle dealerships? And yet, here they are. And every time one of those vehicles goes cruising down the street, someone else looks at it and says “Wow... I want one of those.” Do you think that guy doesn’t already have a car? Of course he does.
Just like he already has an office.
On the basis of vehicle numbers Saskatoon should never sell a new car again. But things change, standards and expectations change, and people’s desires and expectations change. And certainly technology drives evolution as well.
How many people renovate homes, not because the cabinet doors don’t function anymore, but because they are tired of them and just don’t like the look of them now? It is shameful and sinful how much we throw away our built environment just because we don’t like it’s aesthetics anymore. But it is human nature.
“I just saw Janie’s new kitchen and it is to die for!”
If people can afford to make a change, and desire it, they will.
Why did McDonalds tear down all of their 80’s style restaurants in Saskatoon and replace them with new ones? What... the old ones suddenly stopped functioning properly? Of course not. But they are big enough to be able to know from other markets that sales go up enough in new restaurants to justify throwing a perfectly good and serviceable building away. And that is what they did.
Current trends and desires and expectations drive markets.
The only reason no one wanted fancy downtown offices is because no one has seen what that looked like in downtown Saskatoon in thirty years. But now that people with vision and the money to back it up are showing the way, just watch.
Saskatoon’s going to get moved into a new “office bracket”. That place in the suburbs that forces a longer commute for half the office, with a freezing cold walk through the gravel parking lot, and no corporate gym with showers, and blowing dust outside all summer, is going to start to look really tired. Or that 1960’s drafty building that used to be a TV repair shop (remember those?) and was converted into office space in 1998 is going to become embarrassing for attracting clients or staff to the engineering or law firm. Or the small business doing IT or communications work for whom somebody like Nutrien represents half their business, and it will only help to be located a few floors down.
People’s built environment is just like the clothes they wear and the cars they drive. Most of it sells based on desire, not need. People make decisions, especially purchasing ones, with their heart and then try to back it up with their head. And they send the old stuff to value village. And someone else uses it.
The equivalent in buildings will be a whole lot of people moving, renovating, and lots of upgrading. Everybody will be moving up to something better, because the shiny new buildings showed them the way. And others will move up into the space vacated by others and so on down the line. At the bottom, the space will be converted, into high end residential, and everyone will be happy.
These are the factors that people looking at square footage numbers are missing. Human nature is human nature. And it will always drive things forward.
The naysayers will always quote numbers to justify their pessimism, and the builders, movers and shakers will drive forward despite what they say, simply because it puts a smile on their face, or a buck in their pocket, or both.