The COVID-19 pandemic brought about much change in the world, including a shift in how a large chunk of the population works. We saw the majority of office workers transition to remote work overnight, leaving offices and commercial space empty throughout the nation. This caused a shift in commercial real estate, where demand has gone down dramatically throughout the course of a few months.
So what is the future of commercial real estate?
Although it remains to be seen, we can speculate on commercial real estate adapting to the needs and new priorities of companies and individuals alike.
Many companies are starting to reopen offices cautiously throughout the country, but the prolonged period of working remotely has shifted the cultural conversation around flexibility with work.
Some employers are allowing their teams to work remotely indefinitely. Most are implementing innovative approaches to keep employees safe and more spread out in the office space.
Some employers are allowing employees to work half remote and half in the office, and they may not return to the same 9-to-5 schedule they had grown accustomed to before the COVID-19 pandemic.
This leaves companies evaluating their need for office space and the location(s) of their office spaces as they map out costs in the coming months and years. Marketwatch.com believes that “landlords will likely have to consider much shorter lease terms than they have in the past and think of more creative ways to use their space in order to attract tenants back.”
Given COVID-19, there will be greater demand for working arrangements that allow for more personal space, but the desire for more square footage per head may clash with the financial circumstances of many companies who suffered during the pandemic.
Techcrunch reports that many individuals and companies alike have stopped paying rent throughout the pandemic due to financial constraints, and in some cases as a way to “stronghold landlords to reduce rent across locations”.
Health and safety upgrades will also become a priority in commercial real estate as companies, property managers, and landlords cater to the needs of concerns from employees and individuals. In this article, Dr. Joseph Allen of the Harvard T.H. Chan School of Public Health says that “more money will be spent and should be spent on fans, filters, ductwork, chillers, heat exchangers, and dehumidifiers—and on the energy to run them”.
Dr. Allen even takes it a step further, saying that “the next wave of intervention will be in the collection of population information regarding who enters the building and when. With facial recognition and infrared cameras, there can be time series data collected from your temperature and probably what was in the breaths you exhaled, captured over weeks and years, as you enter vestibules and ride elevators.”
How the commercial real estate market develops throughout the coming months and years remains to be seen, but many people in the industry and beyond remain hopeful in a resurgence sooner rather than later.