There hasn’t been much good news in Calgary’s downtown office market over the past six years. However, Hines bucked the trend this week, announcing the signings of two local tech firms to leases at its downtown class-A First Tower.
Symend and Userful have leased a total of 105,000 square feet at First Tower, a 27-storey, 730,200-square-foot property. The two new leases bring the occupancy to just shy of 50 per cent in the building, which recently underwent an extensive renovation and upgrade.
Oil prices began their collapse in the latter half of 2014, leading to thousands of job losses in the oil patch and a subsequent exodus from office space in Calgary’s core. The vacancy rate spiked to record levels in the 30 per cent range and has remained elevated, hovering in the mid-20 per cent range today.
“Our sole focus at First Tower has been on meeting and exceeding our tenants’ objectives – namely the safety, wellness and happiness of their employees while at the same time delivering on efficiency and value, including the lowest class-A additional rent in the Downtown Calgary,” Hines senior managing director Syl Apps said when the announcement was made.
“We are pleased that two high-quality, fast-growing tech firms of the calibre of Symend and Userful have recognized the value proposition and chosen to partner with us at First Tower.”
Hines owns, manages several Calgary office sites
Hines has been active in Calgary since 2007-’08, currently employing about 50 in the region and managing about three million square feet of office space. From an ownership perspective, it owns First Tower as well as Prospect Place, a 121,782-square-foot building.
Apps said Hines remains a believer in Calgary due to its quality of life and “highly educated, entrepreneurial workforce.”
“Naturally that’s going to attract high-quality companies and high-quality employees,” Apps told RENX. “Really, our job in good times and bad times in the market – and we’re clearly going through a challenging time today, but we believe in the city long-term – is to deliver what I would call differentiated value to our tenants.”
He said that involves understanding the challenges tenants face attracting and retaining talent, navigating the economic uncertainty, and driving efficiencies.
Symend, one of the fastest-growing technology companies in North America, has signed a lease for 79,000 square feet. The Calgary-based company will take occupancy in January 2021.
Userful says it is the leading visual networking platform for enterprise clients in the world. The Calgary-based company leased 26,000 square feet and moved into the building in August.
With the oil patch decimated, there is hope in some circles the technology sector could be a saviour for Calgary’s beleaguered downtown office market. Apps sees it more as a contributing factor to any recovery.
“I don’t know if anyone could make a generalization that broad. Clearly, there is an emerging tech sector in Calgary driven by quality workforce, entrepreneurial workforce, quality of living, cost of living. And to the extent that we can support that, nurture that and grow that, that’s great for Calgary, that’s great for everyone,” Apps said.
“At the same time, oil and gas has been the backbone of the city for decades and I expect will continue to be. I think it’s really just a function of where the industry is in the market cycles today.”
First Tower upgraded to class-A
First Tower is located in Calgary’s Downtown East submarket and Hines said it offers tenants “an innovative built environment in which to work.”
Hines bought the property in 2018 with partner Oaktree Capital Management. At the time, it was a class-B property, but the new owners immediately began their refurbishment program.
The tower now features a new 34,000-square-foot, employee-focused amenity floor on the +15 Skyway level (+15 is Calgary’s downtown indoor network of pedestrian pathways). The floor includes a tenant lounge and collaboration area; an outdoor terrace; a spa-quality fitness and wellness centre; and a best-in-class modular conference facility.
If offers easily configurable floorplates, attractive sightlines and a downtown location with unobstructed river views.
Apps said Hines created an “employee-centric, tenant-centric space for them to really leverage the best kind of components of the building.
“Ultimately we understand that our tenants’ and our customers’ No. 1 challenge day in and day out is attracting and retaining the best talent in the market. And if we can give them the tools, obviously in a cost-effective manner, to make their employees happier in the time they spend in the office, that helps them attract and retain the talent they need.”
In a news release, Hanif Joshaghani, co-founder and CEO of Symend, said “the employee-focused approach of First Tower’s highly differentiated amenities and progressive office floor build outs are some of the key characteristics that brought us to First Tower.
“With places to collaborate, socialize and exercise built-in, this state-of-the-art environment helps us attract and retain the best talent in the market as we continue to grow our business.”
John Marshall, CEO of Userful, said a key factor in the company’s move to First Tower was Hines’ focus on providing the tech company’s employees with the highest level of health, safety and wellness especially in light of COVID-19.
“We looked at many buildings in the market, but chose First Tower for Hines’ flexibility, attention to detail and ability to create an environment that fosters work-life balance for our employees,” he said.
Hines is a privately owned global real estate investment firm founded in 1957 with a presence in 225 cities in 25 countries.
Hines has approximately $144.1 billion of assets under management. This includes $75.5 billion for which Hines serves as investment manager, including non-real estate assets, and $68.6 billion for which Hines provides third-party, property-level services.
The firm has 165 developments underway around the world. Historically, Hines has developed, redeveloped or acquired 1,426 properties, totalling over 472 million square feet.
Its portfolio includes 576 properties, representing over 246 million square feet.