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The right address: where a company hangs its hat says a lot about corporate needs.

THE RIGHT ADDRESS FOR MOST BUSINESS, FINDING A PLACE TO SET UP SHOP IS JUST A MATTER OF SQUARE FOOTAGE, PARKING SPACE AND PLUMBING. FOR OTHERS, IT'S ALL ABOUT MAKING A STATEMENT.

More than selling structures of carpet and concrete, Winnepeg's prime commercial properties are marketing an image. Whether it's upscale or down-home, it's calculated. And the tenants are the image-makers.

The cream and enerald green carpet in the lobby of the new $90 million Toronto Dominion Centre at the corner of Portage and Main -- one of Canada's historic pieces of real estate -- demands attention. Mind you, this is not just any carpet, but the kind that would impress even the most well-heeled shoe. It makes a statement about a building that offers the best and the tenants who demand it.

David Rattray, the Pratt McGarry representative for the TD Centre's office leasing division, sums it up in a quick run-through of the Centre's tenant listing.

"Our tenants see value in being close to some of the top legal, industrial insurance-related companies in the city," he says, glancing at an impressive steel blue rendering of the TD centre hanging on the wall. "It's a statement. But it's not an ostentatious statement."

Whatever the statement, it's clearly a successful one with some of the city's top companies taking up space at 201 Portage Avenue. IBM Canada Ltd., Federal Industries Ltd., the law firm of Thompson, Dorfman, Sweatman and the TD Bank itself occupy 16 of the centre's 33 floors. Eighteen contracted tenants have pushed the occupancy rate of this triple-A-rated property to 75 per cent.

These are the anchor tenants who will set the pace for the building, says Noel Dunford, chairman of the Winnipeg Real Estate Board's commercial services committee and a broker with the Regional Group. "They will create the traffic that gets the centre off the ground," he says.

Like any new neighborhood, the block developes one tenant at a time. Wherever the Joneses go, the Smiths follow. Once a bank is in place the framework is set.

And while attracting tenants to any office space takes selling finesse during the best of times, it becomes a complex marketing challenge when your tenant-base is limited and the commercial market is soft. "Competition is very keen for tenants right now, especially in the triple-A buildings," says Dunford.

With more than six million square feet of office space available in the downtown area, 500,000 to 600,000 square feet of good office space still sits vacant.

The TD's "Join us at the Centre" marketing package of green and white billboards, posters and brochures is only the glossy finish on a selling strategy that began in 1987 by approaching people directly, discreetly and professionally.

Says Rattray, "When you build a building of that size you really have to do market research. And that entails going out and physically walking through all the major office towers in Winnipeg to understand who the large tenants are and where they're located."

Federal Industries agreed to a 10-year leasing contract during the initial stages of the centre's development in 1987. "We needed to expand our space because we were running out of room," says Roy Cook, the senior VP of planning for Federal.

Today, the company occupies the top three penthouse floors and more than 23,000 square feet with an option for future expansion. Cook says the TD site offered the best advantages for location, convenience, accessibility and growth.

For some tenants, rubbing elbows with high-profile neighbors clinched the contract. For others, it was simply a matter of more elbow room at the right location.

Tonly Astles, director of development for Bentall Development Inc., the company that initiated the TD project through a joint venture with CN Real Estate Services, says the centre also provides an alternative space for large tenants in the financial core. "Certain types of tenants have very few alternatives in Winnipeg if they're after a premier location. So they're concerned with making the right decision for a long period of time," he says.

But for the Federal Industries, the decision to occupy the penthouse levels was simple. "Because it's the best," laughs Cook.

Attracting and maintaining that level of excellence has meant aggressive marketing to compensate for an office vacancy rate in the city of 15 per cent, more than double the normal rate.

"People are sensitive in these economic times so I think you have to push a little harder to get a commitment," says Rattray.

Slow markets in recent years in Toronto have meant extravant inducement packages to attract leasing contracts. Bargains, subsidies and concessions have become common clauses in commercial contracts. Free rent in exchange for long-term commitment and concessions in operating expenses and property taxes have become the main attractions, according to Astles.

"In Toronto, the inducement package is as high as four or five years free rent on a 10-year lease," he says, adding that in markets south of the border, such as Houston and Colorado, the packages range from moving expenses and cash bonuses to BMWs and free trips.

Winnipeg's smaller and more stable market has meant a more conservative approach to inducements. The TD Centre offers a turnkey package which includes design and construction services.

Says Rattray, "You basically get a move-in date and everything is done. But the bottom-line is that there are no fire sales in the city right now."

A few blocks down from the commercial hub of Portage and Main, a different attitude to image-making and risk-taking is being constructed at the Forks Development.

The scale is smaller but the challenge to create a specific statement takes on new dimensions in the mom 'n' pop retail atmosphere of the Forks Market. Fifty per cent of the tenants are start-up business. Designing a marketplace image has meant a calculated screening of potential tenants to avoid a slick shopping centre formula, says general manager Randy Cameron.

"It's all owner-operated, so to get out to the grassroots you can't use the normal institutional approaches to leasing," says Cameron.

Computerized matchmaking and discreet phone calls were displaced by more direct methods, he says. Initial marketing strategies in 1987 relied on media publicity, print ads and actually walking into business. The early footwork amounted to 40 per cent of the site being pre-leased.

While the project was given a jump-start by public funds, today it operates on the income generated by its tenants.

Attracting start-up business to the market has also meant a more creative and versatile tenant-landlord relationship. It's one which doesn't end once the contract is signed and the key is in hand, says Cameron.

"Here we find we have to be involved," he says. "We sit down and do business plans and accommodate our tenants."

Inducement packages are offered more as life supports than perks for fledgling operations in slow economic times, says Cameron. "We opened in the middle of this very dubious, very tempestuous economy and as such we've had to become more receptive than landlords have had to be in the past. We've had to share the risk with tenants."

Risk-sharing has meant subsidizing and basing rents on generated volume. The maret gives the person who doesn't have the financial resources the chance to test-drive their business concept. The fast-food category of the market is the only exception to contract concessions. With 100 per cent occupancy, it operates on fixed rents.

After only 14 months of operation, the market is 75 per cent leased and verging on the break-even point.

Whether it's a hotdog stand or a national corporation, the new kid on the block sets the pace for any development. And while carpets make a first impression, the tenants make a lasting one.
COPYRIGHT 1991 Manitoba Business Ltd.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Author:Sanders, Liana
Publication:Manitoba Business
Date:Mar 1, 1991
Words:1286
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