Metro work­ers set­tle into swanky new tower

Vancouver Sun - - FRONT PAGE - JENNIFER SALTMAN jen­salt­man@post­media.com Twit­ter.com/jen­salt­man

Af­ter more than a year of prepa­ra­tion and three busy week­ends of mov­ing, the em­ploy­ees of Metro Van­cou­ver are set­tling into a new head of­fice.

Un­til this week, the re­gional district, which pro­vides ser­vices such as drink­ing wa­ter, liq­uid and solid waste dis­posal, re­gional planning, re­gional parks and af­ford­able hous­ing, was lo­cated in ad­ja­cent build­ings (4330 Kingsway and 5945 Kathleen Ave.) in Burn­aby.

Metro’s new of­fice space is in Metro­tower III, about a kilo­me­tre away.

“I think we’re quite ex­cited that we have some new space,” said Ray­mond Louie, a Van­cou­ver city coun­cil­lor who is also vice-chair of Metro Van­cou­ver’s board of di­rec­tors.

Ivan­hoe Cam­bridge ap­proached Metro in the spring of 2015 with the op­tion to buy Metro­tower III, a 29-storey LEED Plat­inum build­ing that opened in 2014 and has more than 414,000 square feet of of­fice space, al­most twice as much as in Metro’s old build­ings.

Be­fore clos­ing the pur­chase for $205 mil­lion in De­cem­ber 2015, Metro com­mis­sioned three re­views by two dif­fer­ent com­pa­nies, and had two com­mer­cial real es­tate agen­cies com­pare prop­erty val­ues, look at avail­able of­fice space and pro­vide sup­port. Metro had pre­vi­ously asked Mor­ri­son Her­sh­field to do two as­sess­ments of its cur­rent prop­er­ties in 2011 and 2013.

The busi­ness case for pur­chas­ing the new build­ing in­cluded a com­par­i­son of three sce­nar­ios: stay­ing in the ex­ist­ing build­ings and ren­o­vat­ing, re­lo­cat­ing to Metro­tower, or build­ing new head of­fices. De­tailed fore­cast­ing was done for a 20-year pe­riod.

It found that ren­o­vat­ing the old of­fices would have cost slightly more than mov­ing to Metro­tower. The older build­ings re­quired ex­ten­sive work, in­clud­ing re­plac­ing all of the ex­te­rior win­dows, and up­grad­ing me­chan­i­cal ele­ments such as the heat pumps and el­e­va­tors.

Build­ing a new head of­fice was pro­jected to cost $561 mil­lion.

“Pri­mar­ily, it did come down to fi­nances,” said Louie. “Our ex­ist­ing fa­cil­i­ties were no longer meet­ing our needs, both in space and the amount of in­vest­ment we would have had to make for a de­te­ri­o­rat­ing build­ing.”

The other ar­gu­ments for mov­ing in­cluded lower op­er­at­ing costs, the po­ten­tial for fur­ther ex­pan­sion and rev­enue, and sus­tain­abil­ity.

The as­sess­ments found that the old of­fice space would be at or near­ing the end of its use­ful life within 20 years, while Metro­tower has an es­ti­mated 75-year life­span.

The 2016 op­er­at­ing bud­get for the ex­ist­ing head of­fice com­plex was $5.6 mil­lion, com­pared to $4.2 mil­lion for Metro­tower. The costs are lower be­cause of more ef­fi­cient build­ing op­er­a­tions, main­te­nance and man­age­ment ser­vices. Lease rev­enue also brings down the op­er­at­ing costs.

Metro has about 900 em­ploy­ees and is us­ing 16 floors of the new build­ing, but there is po­ten­tial to house a to­tal of 2,000 em­ploy­ees. Un­til Metro needs more space, the rest of the build­ing will be leased. Cur­rent ten­ants in­clude Hem­mera, London Life and Stan­tec.

Be­cause the new build­ing is LEED Plat­inum, it is more en­vi­ron­men­tally friendly than the old head of­fices. For in­stance, there is a stormwa­ter man­age­ment sys­tem, heat re­cov­ery, en­ergy-ef­fi­cient light­ing, non-toxic build­ing ma­te­ri­als and more. It is also even closer to SkyTrain and buses than the pre­vi­ous build­ings.

Metro had a bud­get of $30 mil­lion to make tenant im­prove­ments, which in­cludes ev­ery­thing from the walls and car­pet to most of the new fur­ni­ture. The im­prove­ments took about 14 months and came in just un­der bud­get.

“It’s got a whole new feel of col­lab­o­ra­tion, of work­ing to­gether, (which has) sort of brought a new en­ergy to the group,” said Greg Smith, gen­eral man­ager of cor­po­rate ser­vices.

Metro’s ex­ist­ing build­ings, which have a com­bined as­sessed value of $87.7 mil­lion, went up for sale in Au­gust. The goal is to have them sold by the first quar­ter of 2018, and the money from the sales will go to­ward pay­ing for the Metro­tower pur­chase.

“We know that our cur­rent prop­erty is worth quite a bit and we’re go­ing through the process to achieve the high­est re­turn and pay down the debt,” said Louie.

Ac­cord­ing to Metro, the es­ti­mated cost to home­own­ers for the new head of­fice is $5 to $6 per year from 2018 to 2031, and it is ex­pected the debt will be paid off by the end of that pe­riod.

JA­SON PAYNE

Metro staff have taken pos­ses­sion of the LEED Plat­inum-cer­ti­fied Metro­tower III, which it had pur­chased in 2015 for $205 mil­lion. It’s sell­ing its for­mer of­fice build­ings and us­ing the pro­ceeds to pay down debt.

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