Edmonton Construction 11 (November 2011) - Page 397

Hallsy's Toupee · #**7921** Posted **Jun 21, 2013, 2:07 AM**

Here's the news piece on AIMCo tower
http://edmonton.ctvnews.ca/video?clipId=951576&binId=1.1203428&playlistPageNum=1

hqcan · #**7922** Posted **Jun 21, 2013, 3:28 AM**

Quote:

Originally Posted by Rogie

Sounds like a pressure tactic.

Well this sucks. Unfortunately it cements the fact that Edmonton just can't build any meaningful corporate base in it's core. So our only plausible scenarios here are that a) this tower never get's built because we can't attract any major tenants, or b) the city moves in and we have a public institution occupying the undoubtedly highest $/sqft space in downtown...

christopherj · #**7923** Posted **Jun 21, 2013, 3:57 AM**

Quote:

Originally Posted by Rogie

Sounds like a pressure tactic.

Or perhaps the reality that they need a tenant before starting construction, and the city is currently looking for office space?

Coldrsx · #**7924** Posted **Jun 21, 2013, 5:09 AM**

They are marketing this tower to MANY potential large tenants, not just the City.

CMD UW · #**7925** Posted **Jun 21, 2013, 5:43 AM**

Quote:

Originally Posted by christopherj

Or perhaps the reality that they need a tenant before starting construction, and the city is currently looking for office space?

And that sir, is the answer. They are basically not planning on going on spec, and nor should they from a risk perspective.

Hallsy's Toupee · #**7926** Posted **Jun 21, 2013, 1:39 PM**

You guys may want to contact CTV then...the news piece does imply that the AIMCo tower is contingent on winning the City bid.

240glt · #**7927** Posted **Jun 21, 2013, 3:03 PM**

^ Well it'll be contingent on someone leasing up a good portion of the tower. Considering that's likely to be AAA space @ $40 PSF I don't think the city will be moving all it's office drones into it. Don't believe everything you hear in the news...

Some other big company whose lease expires in 2016 and might be in the market to trade up to nicer digs on the other hand...

Rocket252 · #**7928** Posted **Jun 21, 2013, 3:17 PM**

^ Stantec?

kcantor · #**7929** Posted **Jun 21, 2013, 4:22 PM**

Quote:

Originally Posted by 240glt

^ Well it'll be contingent on someone leasing up a good portion of the tower. Considering that's likely to be AAA space @ $40 PSF I don't think the city will be moving all it's office drones into it. Don't believe everything you hear in the news...

Some other big company whose lease expires in 2016 and might be in the market to trade up to nicer digs on the other hand...

it's not just "@ $40PSF"... it's a little more complicated than just paying economic rents for new construction.

firstly, it's probably $40 psf plus $16 psf in cam costs for a total occupancy cost of $56 psf.

much of the comparable space that would be vacated is probably $25 psf "as is" today plus $20 psf in cam costs for a total occupancy cost of $45 psf. that's a differential of 24% (56/45), not 60% (40/25). the new leed gold spaces are simply that much more efficient to run and those savings accrue directly to the tenant.

secondly, most of the existing floor plates are much less efficient that what can be achieved with new construction. floor plates themselves are more efficient - by a factor of 10 - 12% - and the space planning between them is also much more efficient. when this is combined with the move from smaller spaces and smaller plate sizes (i.e. eliminating reception spaces and meeting spaces and mail rooms and photocopy spaces and washrooms and break spaces), the rentable space per employee can be come down from a typical 250 sf to 180 sf (and often less than that for those call centre spaces).

at 250 sf per person and $45 psf gross rents, your cost per employee is $11,250per annum.

at 180 sf per person and $56 psf gross rents, your cost per employee is $$10,080 - a 10.4% annual savings even with AAA rents.

thirdly, if you are moving out of 5 or 6 buildings into just one, your actual operations become much more efficient. if you need a meeting with four department heads, you're a short elevator ride - or stairwell - away. you don't need to have all of them book an hour and half for a half meeting simply to get to and from their own office. the same efficiencies are available for "line staff" as well when they need to confer on files that more than one department are processing.

fourthly, moving from 5 or 6 buildings into just one is much more efficient for architects and planners and engineers and for the public when going about their business with the city. they don't need to visit 5 or 6 buildings to get an update from all of the departments dealing with their file. they also don't arrive at one building and then get sent to another one entirely to deal with their concern whether it's taxes or deck permits or transit.

it's not about "AAA space for office drones who don't deserve it", it's about the more efficient acquisition and use of space for the city to conduct its business and for those businesses and individuals who deal with the city... and if their turnover and retention rates go down in addition to their efficiencies going up as a result of the space they get to work in, that's probably a good thing for the taxpayer, not something to be avoided.

MalcolmTucker · #**7930** Posted **Jun 21, 2013, 4:30 PM**

Enbridge needs space but isn't squeezed enough yet to go in on preleasing I'm hearing.

240glt · #**7931** Posted **Jun 21, 2013, 4:40 PM**

Quote:

Originally Posted by cdnklc

it's not just "@ $40PSF"... it's a little more complicated than just paying economic rents for new construction.

firstly, it's probably $40 psf plus $16 psf in cam costs for a total occupancy cost of $56 psf.

much of the comparable space that would be vacated is probably $25 psf "as is" today plus $20 psf in cam costs for a total occupancy cost of $45 psf. that's a differential of 24% (56/45), not 60% (40/25). the new leed gold spaces are simply that much more efficient to run and those savings accrue directly to the tenant.

secondly, most of the existing floor plates are much less efficient that what can be achieved with new construction. floor plates themselves are more efficient - by a factor of 10 - 12% - and the space planning between them is also much more efficient. when this is combined with the move from smaller spaces and smaller plate sizes (i.e. eliminating reception spaces and meeting spaces and mail rooms and photocopy spaces and washrooms and break spaces), the rentable space per employee can be come down from a typical 250 sf to 180 sf (and often less than that for those call centre spaces).

at 250 sf per person and $45 psf gross rents, your cost per employee is $11,250per annum.

at 180 sf per person and $56 psf gross rents, your cost per employee is $$10,080 - a 10.4% annual savings even with AAA rents.

thirdly, if you are moving out of 5 or 6 buildings into just one, your actual operations become much more efficient. if you need a meeting with four department heads, you're a short elevator ride - or stairwell - away. you don't need to have all of them book an hour and half for a half meeting simply to get to and from their own office. the same efficiencies are available for "line staff" as well when they need to confer on files that more than one department are processing.

fourthly, moving from 5 or 6 buildings into just one is much more efficient for architects and planners and engineers and for the public when going about their business with the city. they don't need to visit 5 or 6 buildings to get an update from all of the departments dealing with their file. they also don't arrive at one building and then get sent to another one entirely to deal with their concern whether it's taxes or deck permits or transit.

it's not about "AAA space for office drones who don't deserve it", it's about the more efficient acquisition and use of space for the city to conduct its business and for those businesses and individuals who deal with the city... and if their turnover and retention rates go down in addition to their efficiencies going up as a result of the space they get to work in, that's probably a good thing for the taxpayer, not something to be avoided.

Says the guy with not one but two porposals out to the city

Sorry Ken.. I don't buy it.

Airboy · #**7932** Posted **Jun 21, 2013, 5:41 PM**

Quote:

Originally Posted by Rocket252

^ Stantec?

If they move it will probably be to Katz Tower D.

kcantor · #**7933** Posted **Jun 21, 2013, 6:43 PM**

Quote:

Originally Posted by 240glt

Says the guy with not one but two porposals out to the city

Sorry Ken.. I don't buy it.

the math is what the math is - i'm not sure what there is for you to "buy" or "not buy".

as for whether the city "buys" anything or not, it won't be because of what we - or anyone else - is proposing to them. it should be because they will have done the math for themselves based on their own requirements and selected a proposal that best meets those requirements. and if they do so, they have come to the same conclusion that many others have arrived at, not because anyone "sold" them something.

if that happens they will have arrived at the same conclusion as thousands of other public and private office space users here and in calgary and in vancouver and in toronto and in barcelona, chicago, hamburg, london, paris, san francisco... office space isn't any different than anything else - you will get what you pay for. if it doesn't provide value, it shouldn't be bought. but, like everything else, value isn't just a function of price.

in that respect, office space is no different than mechanical systems - the best value isn't always represented by the cheapest system built from the lowest cost components (as you are often quite happy - and quite right - to point out even if they are being bought by the city).

ccw219 · #**7934** Posted **Jun 21, 2013, 8:20 PM**

^ Agreed.

Also, the guy puts together an informed and compelling breakdown of the many pricing/efficiency factors at play - he DOES have 2 proposals after all - and then we don't "buy" it? Let's encourage the informed opinions shall we?

ccw219 · #**7935** Posted **Jun 21, 2013, 8:21 PM**

Quote:

Originally Posted by Airboy

If they move it will probably be to Katz Tower D.

Just curious - what about Stantec screams Tower D? Location?

240glt · #**7936** Posted **Jun 21, 2013, 9:08 PM**

*sigh*.. am I really going to break this down Kantor-style ?

Quote:

Originally Posted by cdnklc

the math is what the math is - i'm not sure what there is for you to "buy" or "not buy".

It's called a "figure of speech" Ken

Quote:

as for whether the city "buys" anything or not, it won't be because of what we - or anyone else - is proposing to them. it should be because they will have done the math for themselves based on their own requirements and selected a proposal that best meets those requirements. and if they do so, they have come to the same conclusion that many others have arrived at, not because anyone "sold" them something.

Rambling asside, tell me how moving.. say.. a 50K SF call centre that currently leases at $16 psf+ o.c. becomes less expensive to run at $56 ?

Yes there are inherent efficiencies in consolidating space, and I agree with Ian, that not all these offices necessarily need to be in one building.

Quote:

if that happens they will have arrived at the same conclusion as thousands of other public and private office space users here and in calgary and in vancouver and in toronto and in barcelona, chicago, hamburg, london, paris, san francisco... office space isn't any different than anything else - you will get what you pay for. if it doesn't provide value, it shouldn't be bought. but, like everything else, value isn't just a function of price.

LOL.. I'm not suggesting that we ram these folks into Atco trailers at the edge of town... good lord. But.. for civic government employees.. I feel that these people do not necessarily need the glass & marble treatment that.. say... a high profile law or engineering firm does. Some city offices yes likely merit the cost & benefit of a AAA class building. But a great many don't.

My big fear is that this RFP is being driven not by the need to consolidate space, but an other social exercise in downtown revitalization. Not that I don't think that's great.. but this is the wrong way to go about it. BOMA Edmonton has themselves expressed the same concerns that I have. So have some leaders in the industry here. I happen to agree with them.

Quote:

in that respect, office space is no different than mechanical systems - the best value isn't always represented by the cheapest system built from the lowest cost components (as you are often quite happy - and quite right - to point out even if they are being bought by the city).

Well I am glad that someone listens to my rambling too... appreciate that Ken

240glt · #**7937** Posted **Jun 21, 2013, 9:13 PM**

Quote:

Originally Posted by Airboy

If they move it will probably be to Katz Tower D.

Possibly.. But they've have a much longer standing relationship with AIMco

I get the feeling that they are being woo'ed a bit

s211 · #**7938** Posted **Jun 21, 2013, 9:50 PM**

Quote:

Originally Posted by cdnklc

it's not just "@ $40PSF"... it's a little more complicated than just paying economic rents for new construction.

firstly, it's probably $40 psf plus $16 psf in cam costs for a total occupancy cost of $56 psf.

much of the comparable space that would be vacated is probably $25 psf "as is" today plus $20 psf in cam costs for a total occupancy cost of $45 psf. that's a differential of 24% (56/45), not 60% (40/25). the new leed gold spaces are simply that much more efficient to run and those savings accrue directly to the tenant.

secondly, most of the existing floor plates are much less efficient that what can be achieved with new construction. floor plates themselves are more efficient - by a factor of 10 - 12% - and the space planning between them is also much more efficient. when this is combined with the move from smaller spaces and smaller plate sizes (i.e. eliminating reception spaces and meeting spaces and mail rooms and photocopy spaces and washrooms and break spaces), the rentable space per employee can be come down from a typical 250 sf to 180 sf (and often less than that for those call centre spaces).

at 250 sf per person and $45 psf gross rents, your cost per employee is $11,250per annum.

at 180 sf per person and $56 psf gross rents, your cost per employee is $$10,080 - a 10.4% annual savings even with AAA rents.

thirdly, if you are moving out of 5 or 6 buildings into just one, your actual operations become much more efficient. if you need a meeting with four department heads, you're a short elevator ride - or stairwell - away. you don't need to have all of them book an hour and half for a half meeting simply to get to and from their own office. the same efficiencies are available for "line staff" as well when they need to confer on files that more than one department are processing.

fourthly, moving from 5 or 6 buildings into just one is much more efficient for architects and planners and engineers and for the public when going about their business with the city. they don't need to visit 5 or 6 buildings to get an update from all of the departments dealing with their file. they also don't arrive at one building and then get sent to another one entirely to deal with their concern whether it's taxes or deck permits or transit.

it's not about "AAA space for office drones who don't deserve it", it's about the more efficient acquisition and use of space for the city to conduct its business and for those businesses and individuals who deal with the city... and if their turnover and retention rates go down in addition to their efficiencies going up as a result of the space they get to work in, that's probably a good thing for the taxpayer, not something to be avoided.

A developer negotiating against himself ?

Hallsy's Toupee · #**7939** Posted **Jun 21, 2013, 10:31 PM**

Quote:

Originally Posted by 240glt

My big fear is that this RFP is being driven not by the need to consolidate space, but an other social exercise in downtown revitalization. Not that I don't think that's great.. but this is the wrong way to go about it. BOMA Edmonton has themselves expressed the same concerns that I have. So have some leaders in the industry here. I happen to agree with them.

I think the term I used here is "mercy fuck"!

But as I've said before, its rather sad that we have to rely on government agencies or government-owned firms (ATB, EPCOR) to drive office tower demand, instead of regional/national HQs. Which is why there needs to be a bigger effort to attract and retain businesses and white-collar professionals.

In any case, my inner armchair quarterback is predicting that the city is going to pick a Katz tower, if only to get the arena district development kickstarted.

brenGT2 · #**7940** Posted **Jun 22, 2013, 4:41 AM**

I stopped by the Pearl today to check out the progress. The glass has made a huge leap since I was there last! Here are some photos from earlier today.

Pearl Construction Update: June 21, 2013 by brenGT2, on Flickr