How the boom in St. John's is slamming non-profits
Voluntary organizations are feeling the pinch as rates soar for decent space
Posted: Jun 23, 2012 8:32 AM NT
Last Updated: Jun 23, 2012 1:49 PM NT
We've been talking a lot about Class A office space in St. John's these last few years, as the city settles into its role as a proper hub in the oil industry and companies seek out premium places to work.
I think, though, we need to be talking about something else, in a office-market phenomenon that is connected to the very boom that's driving that Class A building. That is, we need to be talking about what could be called Class V — for volunteer —space, or maybe it could be NP, non-profit.
To bring you up to speed, Class A is — as you might guess — the top of the line for office space. The Building Owners and Managers Association defines this kind of space as having "high-quality standard finishes, state of the art systems, exceptional accessibility and a definite market presence."
At the other end of the spectrum is Class C, which has the bare-bones definition of "competing for tenants requiring functional space at rents below the average for the area."Penny Rowe suggests that a landlord of a vacant building might want to think of turning over the property as a community legacy. (CBC)
In other words, the folks who will take what they can get.
This issue came to the fore earlier this month, when the non-profit tenants of Virginia Park Plaza received a letter from the building managers that told them they were being evicted, to make way for that other driving force of the St. John's real estate market: condominiums.
Years ago, finding alternate space for these kinds of groups would not be so hard — the market was full of affordable, if not necessarily delectable, properties that non-profits could manage.
How things have changed. The strong local economy has meant two things: the supply of available space has long been eaten up by the demand for space. The second point is basic economics: with the supply shrinking, prices have gone up.
Welcome to Penny Rowe's migraine. Rowe is the chief executive officer of the Community Sector Council, the group formerly known as the Community Services Council. Over several decades, it's played a key role in social policy in the province, and has been a cornerstone on which countless voluntary and non-profit groups have relied.
Now Rowe is trying to find a new home, and in a jiffy. They want to move well before their deadline of the end of September.
As Rowe has been scouting the city, she's noticed something that's definitely the case with the marketplace: there may be a shortage of Class A space, but there's still a lot of vacant buildings.
"The first thing you ask is, what's wrong with this building?" Rowe told my colleague Anthony Germain earlier this week on the St. John's Morning Show.
Such is the inventory in the local market. Indeed, Rowe has been reeling from sticker shock — not of the advertised lease price, per se, but the fix-up costs that come with a necessary renovation.
"It's crazy — there's no way we can afford it," she said, noting that the amortized costs of some renovations would translate into additional rental costs of at least $2,000 per month.
Leaning on developers
Rowe has an idea that I think should be explored. While it probably won't help the Council's immediate office search, it's an idea that could be important in the long term.
The idea comes from bigger cities, where there have been "agreements that people are reaching with big developers to set aside some space for community benefit." In other words, the city could use its powers of persuasion — as it reviews the proposed office towers and condo complexes that are lining up — to think about bringing up the multipurpose mix.
As well, Rowe is wondering if some long-term good can come out of the vacant properties — some of which, she notes, have ample parking — that seem to be stagnating while the rest of the market is bubbling up.
"If the owners of those buildings were community-spirited individuals that might like to leave a legacy and have a building in their name, for example, it would be neat if a number of organizations could come together and refit those for the specific kinds of needs of organizations like ours," she said.
Struggling to pay the bills
Rowe didn't identify the companies she's talking about, but I would imagine any one of the three former Dominion supermarkets in St. John's — conspicuously shuttered storefronts that I wrote about several weeks ago — would fit the bill.
I wonder if Loblaw might pick up on that dream. Imagine what that kind of space might mean for groups that provide a valuable service, but struggle to keep things running.
I have a lot of empathy for people who run non-profits, charities and volunteer groups. The expectations are considerable, and making do is a daily worry.
One of my friends canvasses regularly for a charity. I remember an anecdote he once told me of an older gentleman who put some money in his hand, and then grabbed it, while insisting, "Not a dime goes to overhead!"
"Overhead," it could be argued, is almost like a dirty word for such groups, particularly if they have to do fundraising. After all, everyone wants to think their donation goes directly to curing a disease, not paying for electricity. But running an office — and that includes paying the rent — is very much part of the monthly load.
A case example
In the early- to mid-Nineties, I was quite involved with the newsletter of the Writers' Alliance of Newfoundland and Labrador. (Our committee, incidentally, was quite the group, with such members as Bernice Morgan, Geraldine Rubia, Bert Riggs and Anne Hart, to name a few.)
We would meet in the WANL office on Queens Road, in accommodations that could charitably be described as cosy. Meetings involved squeezing in chairs, and hoping the oxygen supply would last.
In time, WANL found new space in the old Board of Trade building on Water Street, in what worked out as a symbiotic relationship: it shared comparatively roomy space with other arts organizations. Somewhere along the lines, WANL moved, and is now, as I understand it, in the Haymarket Square building on Duckworth Street.
That's the nature of non-profits: you move to fit your budget, but you have to be mindful of where you are, and whether the people you serve can easily find you.
This is a paramount problem for SPAN, the Single Parents' Association, which shares space with the CSC at Virginia Park Plaza. Many of the people it works with don't have a lot of cash to spare, which makes it essential that its space be near bus routes and centrally located.
I remember Andy Wells, the former mayor of St. John's, saying he couldn't wait to be "inflicted with prosperity," as put it. His point is that the riches of the offshore oil industry would elevate the city … and they have.
But we have to be mindful of making sure that things don't get left behind, and that's especially so for the groups that work hard to maintain and improve our quality of civic life, or provide vital services to those who can't directly savour the prosperity that has arrived.
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