Office Leasing & Workplace Disruption: The short and long term effects of COVID-19

JUNE 25, 2020

Susan ChangPrincipal, Practice Leader

HOK

@ULIToronto

Moderator: Denise Wong

SVP, Eastern Region, Canadian Office Division

Brookfield

Lisa Fulford-RoySVP, Client Strategy

CBRE

Raymond WongVP, Data Operations,

Data SolutionsAltus Group

altusgroup.com

Office under construction (Toronto, downtown)… Too Much?

0%

2%

4%

6%

8%

10%

12%

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Leased Available Availability rate

SQ. F

T.

AVAI

LABI

LITY

RAT

E

Source: Altus Group3

altusgroup.com4

Downtown Toronto Sublet Activity, moving up

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2Q2020

Sublet as a % of Available Space Availability Rate

altusgroup.com

0%

20%

40%

60%

80%

Increase 5% to 10% Increase <5% No change Decrease <5% Decrease 5% to 10% Decrease >10%

Market rents (face rates) – office by region –rates expected to hold for now.

Top quality

0%

20%

40%

60%

80%

Increase 5% to 10% Increase <5% No change Decrease <5% Decrease 5% to 10% Decrease >10%

National Ontario Quebec British Columbia Alberta

Lesser quality

5Source: Altus Group’s Key Assumptions Survey (April)

remote working will be a key focus of business continuity planning

Source: Asia Pacific Occupier Flash Survey, CBRE Research, April 2020.

W h i c h o f t h e f o l l o w i n g B C P m e a s u r e s d o y o u e x p e c t t o a d o p t a f t e r t h e C O V I D - 1 9 o u t b r e a k ?

85%

Adopt technology to support remote working

Review consolidation strategy to mitigate over-concentration risk

37%

Evaluate the use of ABW during future outbreaks

30%

24% 22% 24%

Consider splitting teams across multiple buildings

Further diversify operating risks between markets

Increase use of coworking space/ serviced offices

© 2020 CBRE , INC | CONFIDENTIAL & PRIORITY.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Density of office space

Use of coworking space or serviced offices

Preference for buildings with WELL/Green features

Adoption of flexible working

Investment in technology to support remote working

Increase No change Decrease

Source: Asia Pacific Occupier Flash Survey, CBRE Research, April 2020.

Focus on technology and flexibility to strengthen in long-termT o w h a t e x t e n t d o y o u e x p e c t t h e r e t o b e a s h i f t i n l o n g - t e r m o c c u p i e r s t r a t e g y i n t h e f o l l o w i n g a r e a s a f t e r t h e C O V I D - 1 9 o u t b r e a k ?

© 2020 CBRE , INC | CONFIDENTIAL & PRIORITY.

Creating the Guidelines

Proactively self-applying or working

with HOK to implement plans for

earliest re-occupancy

Waiting to hear what leading companies are

doing, then implementing

Waiting to see how plans are implemented before creating a plan

Waiting to hear what majority of companies

are doing, then implementing

Skeptics

Conservatives

Pragmatists

Visionaries

Innovators

C LIEN T AD OPTION C URVE

T H E C O N V E R G E N C E

O F

HEALTHCARE +

WORKPLACE

T H E S A V A N N A H E F F E C T P A T H O F T R A V E L W A Y F I N D I N G & S I G N A G E

THE NEW NOW -DAY 1

1. Distributed, Remote Work | WFH

2. Workplace Distancing & Shielding

3. Sanitization and Cleanliness

4. Autonomous, Hands-free, Voice-activated

Workplace, Monitoring

5. Enhanced HVAC systems

OPPORTUNITIES -DAY 2

1. Personal & Group Mindfulness

2. Neurodiversity

3. Gig pool | Just-in-Time Staffing

4. Biomimicry

5. Preparedness for the Next Black Swan

KNOCKING ON THE DOOR

1. Biometrics

2. Robotic

3. Augmentation & Holograms

4. Sabbaticals for Refresh and Reskilling

5. Kodak Moments

I M M E D I A T E F O C U S F O R W A R D F O C U S F U T U R E

2020 AN D B EYOND

Thank You