Have you wondered what the long-term effect of coronavirus on the office leasing market will be? Will the office space persist as it is?
Here are the major trends in the office leasing market.
A Shift to Suburban Properties
An interesting trend that may be affected by Coronavirus is a shift by tenants from properties downtown to more suburban locations. There are several reasons that support this trend, including avoiding traffic from home to lower rental rates, easier logistics in accessing the building/suite (high rises may have long elevator ques due to social distancing) into the building. The increase in remote work, in addition to the new coronavirus health protocols, may accelerate the trend of tenants shifting from leasing Central Business District (“CBD”) office space and starting to lease office space in more suburban settings, closer to the employees’ homes.
Expanding and/or Contracting
Many companies may need to expand their current office space to accommodate the social distancing mandates, and we will therefore see less density in many of the office suites. Others may also realize that only key personnel needs to be in the office all of the time, and contract their space requirements to reflect this while having “Shifts” where employees may work at home part-time, but also work from the office one or two days a week.
A tenant can lease a co-working space for short periods of time to help sort out temporary contraction or growth of its business without having to enter into long-term lease transactions.
However, COVID-19 will most likely have a negative effect on co-working companies for the same reasons that it is affecting higher-density office spaces. Will employees want to share long working tables with other people who may be contagious? The co-working space appears to have peaked and could be diminishing, at least for the foreseeable future.
Why Do We Need Offices?
If COVID-19 has accelerated the trend for remote working, it has also revealed some of its limitations — an organization’s success will still depend on collaboration, face-to-face interaction, and serendipity.
The office has a significant role in providing learning opportunities for younger employees. For young people at the start of their careers, there’s probably more need to be with other people because they are still learning and want to experience social life.
However, a greater amount of remote working will persist, for the sake of resilience, if nothing else. Businesses probably won’t go back to the way things were before. There will definitely be a reduction in occupier demand, though it will be different for each sector. The worst-affected leisure and tourism industries will need less space, while some professional services might be able to continue normally with altered working practices.
What makes coronavirus such a phenomenon is that its effects will push companies in the opposite direction — they will need more workspace per employee.
Hotelization of Offices
To justify their existence, offices will have to become a space with a purpose, and businesses will have to offer safe working environments that provide the feelgood factor and ultimately raise creativity and productivity.
The “hotelization” of office space will also continue, with workplaces including some of the home comforts that we’ve become used to. This may include more relaxed dress codes, but also plants and soft furnishings to make spaces feel cozy while helping to generate distance between people. We need to find design solutions that will create separation without losing collaboration. If offices do have a future, people have to feel safe in them.
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