how is the commercial real estate market changing as a result of covid-19?
COVID-19 has brought changes to nearly every aspect of business, and the real estate market is no different. How is the commercial real estate market changing and what are some long-term effects we may see?
Industrial Spaces Are Weathering The Storm
During a time when demand for most investment properties is going down, industrial spaces continue to be sought after. Investors are holding tight to the ones they own despite the uncertain atmosphere. Over the past several years, a trend towards online shopping has made warehouses and industrial spaces a quintessential part of many online business models. With the pandemic causing an immense and sudden surge in online shopping, businesses are now relying on their warehouse spaces more than ever to support online demand. It’s looking like the industrial sector is well-suited to weather the pandemic, and it also fits in line with growing market trends. Who knows to what degree we will return to in-person shopping once stores can reopen? Online shopping is convenient, easy, and now a habit for many consumers. With this in mind, expanding warehouse space could be a smart move for many businesses and as a result could mean industrial properties are great choices for investment.
Future of Office Spaces?
Within a very short period of time, work life has been completely turned upside down. Office buildings were abandoned, and zoom calls became the new normal for work meetings. Businesses have been forced to adapt to a new atmosphere quickly and efficiently. How will this affect the future of work life? Stay-at-home orders and working remotely have exposed opportunities for businesses to cut costs and accelerate efficiency. In fact, many companies including Twitter have already announced that they are permanently transitioning to remote work. Working remotely eliminates the costs of renting office space, buying office supplies, paying utilities, and more. It also allows access to a wider pool of employees so that companies can pick and choose a strong team with more options and flexibility.
Nevertheless, while working remotely may cut costs, the pandemic has proven more than ever the value of face-to-face interaction. There’s an element of teamwork and collaboration that’s lacking over the phone. Face-to-face interaction is very valuable for the vitality of many businesses and the happiness of their workers. Many employees are itching to get to the office and work with their colleagues in-person again.
For businesses that thrive off of in-person collaboration as a cornerstone of their innovation and competitiveness, how may going back to work change for them? As we transition back to working in-person, health and safety codes for buildings may change as safety measures for future outbreaks. The maximum number of workers allowed in each building and in elevators may change, even permanently. Low-rise office buildings with lots of open space and without elevators will likely be most sought after for companies renewing leases. Constriction on elevator space could mean incredibly long wait times to get up to your office in a high rise building. This could be a huge factor for businesses when deciding where to lease office space. With this in mind, we may see demand shift towards low-rise office buildings with open layouts. Only time will tell!