Office Optimization - Office Swing Space at Union Station

There is approximately 92,000 square feet of space in the East Wing of Union Station. A small portion of the space is currently being used by Union Station operations staff and as a construction site office for various construction projects active at the station, and is otherwise vacant and in need of base building and fit-up investments to support any type of future occupancy. After a third party review of potential use options for the space, and considering the City's priorities of achieving fiscal sustainability, it was determined that utilization of the East Wing as City office space would realize the highest value from the premises. As a result, in the near term, this report recommends utilizing the East Wing as City office space to achieve the following City benefits: - Unlocks value by repurposing underutilized, vacant City-owned space. - Rationalizes external City leases to reduce overall operating costs and improve fiscal sustainability. - Secures critical swing space in the downtown core, enabling further cost avoidance during office optimization and modernization projects versus leasing third party space. Corporate Services and CreateTO have identified five (5) locations where the City leases space from third party landlords at a cost to the City of approximately $2.5 million per year. These five (5) leases are scheduled to expire in 2020. By investing $20 million in base building and fit up costs, the City will be able to eliminate these five (5) City leases, consolidating them into Union Station East Wing to generate immediate cost savings and provide a significant return on investment. This will maximize the utility of the premises in the near term, and will be critical in enabling a broader office optimization plan, which will be brought forward to City Council in the third quarter of 2019. Beyond the initial five (5) leases coming to the end of their term in 2020, there are an additional twenty-five (25) City leases that are coming to the end of their terms over the next (eight) 8 years that will be rationalized, which represents additional opportunity to reduce operating costs associated with the City's office portfolio on a long-term and sustainable basis On a long-term basis, City staff will continue to explore other options for the East Wing, including considerations brought forward by the current head lessee to utilize the space as retail, attraction and/or other commercial and publicly accessible uses.

2. City Council approve the plan from the Deputy City Manager, Corporate Services, to utilize Union Station East Wing on an interim basis to rationalize spaces leased by the City from third party landlords which expire in 2020 and serve as swing space for office modernization projects. 3. City Council, in accordance with Section 71-11.1C of the City of Toronto Municipal Code Chapter 71 (Financial Control By-law), grant authority to amend Purchase Order Number 6030175 with NORR Limited, Architects and Engineers and increase the value of the contract by $850,000, net of all taxes and applicable charges, revising the current contract authority from $44,473,000, net of all taxes and applicable charges, up to a maximum value of $45,323,000, net of all taxes and applicable charges, to provide required additional base building architecture and engineering services for the East Wing Project.