Breadcrumb trail links
A strategic tool to attract tenants and accelerate leasing
Published on Oct 8, 2024 • 3 minutes reading time
You can save this article by registering for free here. Or log in if you have an account.
Move-in ready office space is renting faster, according to a new report. Photo by Getty Images/iStockphoto
Article content
Colliers Canada reported a continued increase in office vacancies in its third-quarter national market review, rising to 14.7 per cent from 13.4 per cent quarter-on-quarter. In response to the sluggish market, landlords are increasingly turning to model suites as a strategic tool to attract tenants and accelerate leasing, particularly for larger office spaces.
Advertising 2
This ad has not loaded yet, but your article continues below.
THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY
Subscribe now to read the latest news in your city and across Canada.
- Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and more.
- Daily content from Financial Times, the world's leading global business publication.
- Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.
- National Post ePaper, an electronic copy of the print edition that you can view, share and comment on any device.
- Daily puzzles including the New York Times Crossword.
SUBSCRIBE TO UNLOCK MORE ARTICLES
Subscribe now to read the latest news in your city and across Canada.
- Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and more.
- Daily content from Financial Times, the world's leading global business publication.
- Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.
- National Post ePaper, an electronic copy of the print edition that you can view, share and comment on any device.
- Daily puzzles including the New York Times Crossword.
REGISTER / LOGIN TO UNLOCK MORE ARTICLES
Create an account or log in to continue your reading experience.
- Access articles from across Canada with one account.
- Share your thoughts and join the discussion in the comments.
- Enjoy additional articles per month.
- Get email updates from your favorite authors.
THIS ARTICLE IS FREE TO READ. REGISTER TO UNLOCK.
Create an account or log in to continue your reading experience.
- Access articles from across Canada with one account
- Share your thoughts and join the discussion in the comments
- Enjoy additional articles per month
- Get email updates from your favorite authors
Log in or create an account
or
Article content
“Model suites have managed to attract tenants looking to reduce their upfront costs by securing a more efficient office space,” the real estate investment management firm said in its report.
The data suggests that larger offices – those with more than 20,000 square feet – with move-in ready office space have a significantly shorter lease term than smaller offices, which are typically between 10,000 and 20,000 square feet. This trend suggests that fully furnished, turnkey model suites are helping landlords present a more compelling case to tenants.
Adam Jacobs, head of research at Colliers, explained the financial implications of this approach.
“This is currently very trendy because it means that part of the costs are passed on to the landlord. Traditionally, tenants have borne the burden of furnishing and furnishing their spaces, but now landlords are stepping in and providing fully equipped offices that are ready for immediate occupancy.”
According to Jacobs, this strategic pivot is particularly important in a market where flexibility is paramount.
“Landlords are finding that by investing in model apartments they can speed up the deal-making process. This allows tenants to move in without the need for complex furnishings, which is becoming increasingly attractive,” said Jacobs. “While a show suite may not be groundbreaking in terms of design – often with white walls and gray carpet – it streamlines the leasing process, which has become slower and more competitive.”
Top stories
Thank you for your registration!
Article content
Advertising 3
This ad has not loaded yet, but your article continues below.
Article content
The report also highlights renewed interest in the downtown Ottawa market, where travel activity has increased significantly, particularly among larger users.
“Show apartments and improved move-in ready spaces remain the focus of leasing activity, while ground floor space is less attractive to tenants due to the high cost of tenant improvements,” the Colliers report said.
However, implementing model suites is not without challenges. Jacobs points out that while many companies are attracted to the standard solutions offered by model suites, in some industries, such as legal and technology, there are specific needs that may not be met by standardized office configurations.
“It's a one-size-fits-all solution that works for many, but there are still users who need individual privacy or collaboration settings,” he explains.
Additionally, not all landlords have the capital to invest in creating model apartments, making this strategy more viable for larger or more financially stable property owners.
Recommended by Editorial
-
Real estate investing has taken a hit, but not all markets are equal
-
RioCan's profit rises in the second quarter due to a robust tenant mix
-
Commercial real estate agents cite capital gains tax as a reason for record sales
Advertising 4
This ad has not loaded yet, but your article continues below.
Article content
“This approach requires a long-term perspective when it comes to leasing,” Jacobs said. “Landlords may incur higher upfront costs, but they have confidence that filling their buildings now will deliver benefits in the future, particularly as the market improves.”
“The ability for landlords to offer move-in-ready spaces has become a key differentiator in a market where many companies are looking for speed and convenience,” Jacobs said.
• Email: [email protected]
Bookmark our website and support our journalism: Don't miss out on the business news you need to know – bookmark Financialpost.com and sign up for our newsletter here.
Article content
Share this article on your social network