The impact the COVID-19 virus is having on the commercial real estate sector is immense. We recently looked at how the pandemic is specifically affecting retail landlords and tenants, as they struggle in the face of self-isolation, social distancing and regional lockdowns.
In this, the second installment in this two-part series, we look at how the sudden change in work patterns is affecting the use of office space and the impact that will have on corporate property owners, operators and occupiers going forward. The blog examines what they need to understand to more effectively deal with the fallout from the worst global health crisis we have seen in the modern age.
New modes of working
Social distancing and remote working are being encouraged by businesses around the world, and for many it has become corporate policy. However, there are still a number of companies where remote working isn’t possible, for a variety of reasons, and the short-term action occupiers or landlords – whomever is responsible – need to take is making sure the regularity and intensity of office cleaning is increased and ensuring there are a number of sanitizing stations available to workers. Additionally, if any workers or visitors infected with coronavirus have been in the building then offices need to be closed down in order for a deep clean to take place.
For the companies where staff are working remotely, the current situation is likely already prompting them to rethink office space in the long run, questioning how they have previously utilized and occupied office space. Many modern offices are now open plan to help boost collaboration and encourage workers to socialize more, but it’s a double-edged sword because it means employees who are working closely together are more likely to transmit viruses between one another.
Assessing the new future for the workspace
As long as the COVID-19 crisis is having its current impact, the use of space and proximity of workers will have to be assessed and addressed in offices and other workplaces where people are still required to come in. Using data and technology to do this in the quickest, most accurate, effective way will be critical to organizations that need to move fast. On the facilities management side, having the technology to register and track which visitors are in a building when and for how long may also be critical to managing the number of people at a particular site at any one time and tracing any contact if that were to become necessary.
In the near term, landlords need to be prepared for tenants looking to break leases early, seek reduced rents or longer payments as the ongoing impact of coronavirus becomes clear. Many businesses are facing the possibility of having to reduce their workforces during the crisis, so landlords should look to work with these tenants to find alternative solutions that bridge the gap during the crisis.
Looking further forward, we are likely to see increased demand for things that will make open plan office environments healthier, like fans, filters, and dehumidifiers – and spaces that ensure people have enough social distance even in better times. We are also likely to see the trend toward working from home become a stronger consideration in workspace planning, as companies choose to provide more flexibility in this area on a longer-term basis. This may require greater flexibility within offices and other workspaces – and in the leases that occupiers seek moving forward.
Working together to ensure the future of commercial real estate
The COVID-19 pandemic is presenting the commercial real estate industry with unprecedented challenges and the best way to overcome them is to put in place plans for a worst-case scenario and hope it doesn’t come to that. Another key will be using the right technology to regularly create clear and consistent updates for investors, partners, employees and other stakeholders, which will help ensure their cooperation as businesses adapt to the rapidly changing conditions they are facing and prepare for a less turbulent future.
To come out on the other side of the coronavirus crisis as strong as or stronger than ever, landlords and property managers – whether dealing with retail properties or offices – need to work closely with tenants to find creative solutions; leveraging technology to understand your business situation in terms of leases and assets will be critical. The industry was already starting to recognize the importance of this type of collaboration, and the drive to survive the COVID-19 crisis might just push cooperation to a whole new level – and that can only be a good thing at the moment.