Building History: 1970s - 2005
1970s-1994–Moving to 25 Sheppard Avenue West
In the 1970s, PEO out grew the head office at 236 Avenue Road, which it owned, and moved to a leased space at 1027 Yonge Street. PEO moved again in 1985 to 1155 Yonge Street. During the early 1990s, PEO needed more space and examined the lease-buy option.
In, 1994, PEO leased 32,000 sf at 25 Sheppard Avenue West (25 Sheppard) for at a term of 15 years. The leasehold improvements were very high-end and cost about $65/sf at the time. The building served PEO very well, however, in the final few years of the lease, meeting space for regulatory functions was not adequate. The occupancy cost of the space exceeded $1.2 million in 2009. PEO would also soon have incurred additional costs for off-site room rental due to lack of available meeting space at 25 Sheppard. Over the 15 years of the lease at 25 Sheppard, occupancy costs totaled more than $17 million with no equity being retained for PEO.
2001–Accommodation Task Force
PEO created the Accommodation Task Force (ATF) to look at PEO’s future needs.
2005–Council Endorses the Decision to Buy
The AFT presents the lease vs. buy decision to Council. In making its decision, Council considered the following:
- Income securities and some equity will likely provide a greater return each year.
- A bigger building for current needs provides the opportunity for growth. Location is essential to ensure space to keep the vacancy rates in the building at a level to maintain the conservative revenues considered to make this a viable move for PEO;
- PEO’s occupancy costs beyond 2009 will be less than the 2005 annual cost of $1.24 million. The reduction in this cost will likely be even greater in future years. PEO’s municipal taxes will be reduced by 75 per cent under the Municipal Act, if it owns the property (savings ~$200,000/year); and
- PEO Council criteria: in complete control of the use and occupancy of its space; owns its building; good public exposure; and lower annual operating costs.