In a bid to optimize its real estate portfolio, the City of Toronto has kicked off a pilot Office Modernization Program (OMP) targeting 10 to 15 per cent in cost savings. Over the next 12 months, the municipality will complete three renovation projects designed to test new space standards. In a report, staff said it expects the more efficient use of space envisioned in the projects to enable the city to collapse a lease ending next year and avoid future costs as it accommodates growth.
City Council in July approved the $3.12 million in capital funding it will take to begin the program this year. Next year, the remainder of the pilot’s price tag, pegged at a total of $9.15 million, will be considered as part of the budget process. Once the City achieves payback — in about 7.5 years — the pilot is projected to generate $1.08-million in savings annually.
More than a cost-saving exercise, the modernization program is intended to capitalize on the benefits associated with current workplace design trends such as collaborative areas, open floor plans and unassigned workstations.
“One of the key objectives of the OMP program is to improve employee engagement and productivity as well as attract and retain talent,” says Josie Scioli, chief corporate officer at the City of Toronto.
The program marks the first time in roughly 10 years that the municipality has updated its office standards. Although this hasn’t stopped some divisions, such as Municipal Licensing & Standards, that have mobile employees like inspectors from moving to shared work space models.
The program’s proposed changes are based on recommendations from Gensler, a firm with space design expertise that the City commissioned to conduct a review of its office environments.
“Gensler’s review didn’t reveal any major surprises,” says Scioli. “The review highlighted that the current work environment at the City was not aligned with new and evolving work habits and business needs for more collaborative and flexible spaces.”
The chief corporate officer points to open floor plans, though incorporated into some the municipality’s recent renovation projects, as the most significant departure from its current office standards.
“The move will reduce the number of enclosed offices and bring more flexible focus/quiet areas and touchdown stations, and will likely double the floor plate area dedicated to collaborative work (meeting rooms, flexible and shared work spaces, etc.),” says Scioli.
Gensler’s design recommendations included providing ample access to daylight, long sight lines and a welcoming atmosphere. The firm also recommended where to test the new standards based on factors such as employee readiness and floor plan suitability.
The renovation projects will transform the second and fifteenth floors of Metro Hall as well as the first floor of North York Civic Centre, which will affect Toronto Building, the Information & Technology division and the Chief Corporate Office. An accompanying change management program will guide the transition of the roughly 520 employees involved to their new work environments.
After the pilot ends, staff will analyze its results and use its findings to inform the overhaul of its office standards.
“The assessment will include both quantitative metrics as well as qualitative employee response to new space,” says Scioli. “A number of key performance indicators and metrics were collected prior to the pilot to allow for comparative analysis on the modernized space.”
Staff is due to report back to council in the third quarter of 2016, after the three renovation projects have been completed. If the program rolls out across the City’s real estate portfolio, staff forecasts that the municipality could potentially save $4 million to $6 million annually at its target of cutting real estate costs by 10 to 15 per cent. Currently, it spends $40 million annually — more than $6 million on office rent and $34 million to run city-owned buildings.
The City is also contemplating alternative work arrangements, such as telecommuting, as it develops a new mobility policy.
Michelle Ervin is the editor of Canadian Facility Management & Design. Reach out to Michelle on twitter via @michellervin