ISSUE 6

THE BEAUTY OF RETROFIT

Retrofit RemandA former remand centre may receive a new lease on life

ACOUSTIC DESIGN | ASK AN EXPERT | NET ZERO IN DEVON | MAIN STREET EDMONTON

CLIMATE CHANGE

THE RETROFIT ECONOMYDeep retrofits key to Canada’s low-carbon future

The impact of retrofit in mitigating climate change

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The Calgary skyline in 2014 was a testament to the optimism that comes from bumper year after bumper year, filled with cranes piecing together office towers, the sounds of construction work on the ground evidencing the energy of the city, in every sense of the word. Then the price of oil came tumbling down, taking with it the heady days of seemingly endless expansion.

By the end of the fourth quarter of that year, a bustling downtown was drained of its vibrancy. The office vacancy rate nearly doubled from 9.8 at the end of 2014 to 17.6 a year later. Today, that number stands around 27 per cent according to CBRE, the highest it’s been in decades. By comparison, the national average hovers around 11 per cent, with hot spots like Toronto and Vancouver enjoying four and five per cent vacancy rates, respec-tively. Faced with nearly 1.1 million square metres of empty downtown office space, what’s a city to do?

For Artis REIT, the 2014 downturn forced them to recognize that the market had shifted in an important way, and that they would have to be creative in attracting and retaining tenants. “We had to contin-ually adjust our price point and expecta-tions to be competitive in the market,” says Dennis Wong, Artis REIT Executive Vice President of Asset Management in Western Canada. “We increased tenant incentives, as well as broker incentives. We have undertaken a number of capital refurbishments of common lobbies, elevators and washrooms to facilitate our competitiveness. We have added and modernized the amenities in our build-ings that tenants have come to expect.”

Though it has sold three office buildings since 2014, Artis still has nearly 850,000 square feet across six downtown office buildings. With so much real estate, the company’s solution to the glut of office space was to change up its game plan by converting some of its office space to residential space.

The first building to undergo this transfor-mation is Sierra Place, a 92,000 ft², Class C, 10-storey office building. Built in 1958, in the downtown west core office district, Wong says the building’s positioning in the market, coupled with current market conditions and the expected long wait time before its recovery, meant that multi-family was the best use for the property. “Office vacancy in downtown Calgary is hovering around 25 per cent, and B class office vacancy is above 30 per cent,” says Wong. “Absorption of office space is projected to be very modest in the forthcoming year, so we determined that greater cash flows can be obtained through a conversion to multi-family.”

To go from office space to home space posed a number of challenges, as the former obviously was meant to accommodate a different category of tenant than the latter.

“The building has been designed for office use, so the challenge was reworking the plumbing, HVAC and electrical systems in order to find the best way to have independently controlled units for maxi-mum comfort and flexibility,” says Wong.

“The floorplate at Sierra actually converts to residential quite well, but it is not as optimal as a purpose built, multi-family building. Obtaining the needed floorplate efficiency to make the project economical took creativity.”

CRISIS IN CALGARY

Sierra Place photo: veronique arseneau

Calgary faces a steep challenge to reimagine its built environmentHistorically high vacancy rates have developers considering creative ways to reimagine existing towers. by andrew guilbert

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re The Edison will feature a variety of unusual amenities designed to appeal to millenials,

such as a putting green, and a bar featuring local craft beer.

inter-institutional collaboration between six post secondary institutions and Calgary Economic Development, brought together a group of some 30 students from different disciplines and institutions for a 24-hour challenge, the goal of which was to propose new solutions for how to use Calgary’s empty office space. Student groups, split into smaller groups of five or so, each proposed an idea, the four most interesting of which were given the opportunity to continue developing them during the winter semester. A final showcase, occurring in April, allowed the four final teams to create a prototype of their idea in empty office space.

“In crisis comes creativity,  and that’s a lot of where this stems from for us.”

One of those teams was ‘The Roost’, a membership-based studio space for artists that would also feature workshops and gallery space. Courtney Clarkson, a communications student who was part of The Roost, says that in the research they conducted, when asking Calgarians what they thought of the city and what they wanted to see more of downtown, they found that, though the arts were a recurring theme, people’s inclinations

When faced with the fallout from the 2014 downturn, Aspen Properties looked south to San Francisco and Silicon Valley to see what creative companies like Apple, Google and Facebook were doing with their workspaces. Aspen hit upon the idea of introducing a grab bag of unusual amenities to one of their buildings, the former Encana Place, in order to appeal to the younger, “techie” crowd. The 440,000 square foot building, renamed The Edison, now sports features like a book and board game lounge, a putting green, a bar with local craft beer on tap for tenant exclusive events, a 7,000 ft² fitness facility, a 2,500 ft² dog park, basketball area for pickup games and more. Rob Blackwell, Senior Vice President of investments and asset management with Aspen properties, believes that such innovative measures are the key to staying competitive in an overcrowded market like Calgary’s.

“We thought it was tailored towards tech and it’s totally not, it’s tailored towards people who want to hire the best people.” When all is said and done, the reposi-tioning of the Aspen Edison asset will be substantial; but, says Blackwell, their new direction has already paid dividends, as Silicon Valley tech company Rocketspace will be opening its first Canadian office in the Edison’s fourth through seventh floors in 2018. While property owners and managers have obviously taken an interest in how to repurpose the city’s vacant office space, they’re not the only ones. In November of 2016, Vivacity, an

The suites themselves are inspired by downtown lofts in cities like New York and Chicago, with open ceiling, visible building systems in historic properties. The location on 7 Ave. S.W. brought with it nearby urban living amenities, like restaurants, coffee shops and bars, as well as public transit, bike lanes and parks that made it ideally suited for the project. The $16 million repurposing, which will convert the building into 100 apartment suites, began this past fall and is expected to be complete by the end of 2018. It will be the first conversion of its kind in Calgary’s downtown. Artis REIT has identified other potential office asset conversion opportunities, but says that these are all still in preliminary stages.

Another reimagining of office space that is making waves is from Aspen Properties, which owns 1.8 million ft² of office space in downtown Calgary (as well as 900,000 ft² in Edmonton).

“In crisis comes creativity, and that’s a lot of where this stems from for us,” he says.

“There are 300 options if you’re a tenant of over 3,000 square feet in downtown Calgary, so we’re trying to find a way to stand out and that’s what we did here.”In deciding on which amenities to introduce, Blackwell says it was partly a question of surveying the tenants already occupying the building, and partly asking themselves what they would want themselves. This was more than mere hypotheticals for Aspen’s team, as they happen to occupy The Edison as well.

“How do we pick [amenities]? We be self-ish and say, ‘what do I want? What does the guy next to me want? What does the guy down the hall from me want? We’re all looking to have some fun, so what’s your version of fun?”

While millennial was admittedly the demographic they were targeting, they’ve found that “fun” sells, no matter who’s interested in buying. Blackwell says that they’ve had traditional law and accounting firms come through their building and express interest in what they’re doing as a potential draw for the best of a new generation of talent. “Every company today wants to hire the best 25 year old, ourselves included, and the best 25 year old wants a fun place,” says Blackwell.

20149.8%

17.6%

27%

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2016

Office Vacancy Rates Downtown Calgary

were all over the map. “We heard a lot about the arts, which is why my group kept going in the direction it did, but there was a lot of people looking for something, new, different, something to break up the corporate sense of downtown Calgary,” she says. “Kind of escape areas, like areas for yoga, meditation, mindfulness, to give them a way of stepping away from what they’re seeing right now.”

“People don’t just want products, they want to do something, an experience, so they can go home and say, ‘that was awesome, let’s totally do this again!’”

Another group that took part in the Vivacity project was Forge Collaborative Brewing, a co-op brewing space where small brewers could come and create their own beers alongside other beer makers. Their idea, which won the competition, came from a personal problem for one of the members, says Brandon Diprose, a student from the group. “One of our group members’ boyfriend brewed his own beer. She loved the beer but com-plained that it was space consuming, they had a tiny apartment and his brewing equipment took up half of it, and it smelled bad, ” says Diprose. “We couldn’t open another brewery, there were 125 already, and another 30 opening up in the next year, so we needed something to differentiate ourselves and it turned into a co-op space where we could have individual people or teams brewing their own beers, whenever they like.”

Ultimately, for Diprose, the best advice for creating a winning office space redesign is considering the target demo-graphic. “If you’re trying to attract young people, you want experiences. People don’t just want products, they want to do something, an experience, so they can go home and say, ‘that was awesome, let’s totally do this again!’

The Edison Amenities

render: aspen properties

render: aspen properties

golf simulatorbook/board game lounge

tenant lounge

7000 ft².fitness facility

basketball area dog park

re The Edison.