Metro workers settle into swanky new tower
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.
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.