How will COVID-19 Affect Corporate Real Estate in The Future

When COVID hit the world, businesses had to make the very hard decision to close their buildings and allow employees to work remotely. Most thought that the change would be temporary, but we are now a full year later and most companies have no projected re-open date. Large cities like Seattle are struggling to determine what to do with empty buildings and as of September 2020, vacancies rose 20% in the first 6 months. [1]  “Companies including Zillow and REI have signaled that many workers will stay out of the office when employees have been vaccinated. Facebook envisions half its employees working remotely on a permanent basis within the next decade. A Microsoft-commissioned survey found that 71% of managers and employees want to work from home post-pandemic.” [1] So what does the future look like for corporate real-estate?

1. Co-working spaces will become more popular: Co-working spaces allow individuals and small businesses to share spaces and resources (work areas, conference rooms etc.). According to moneycrasher.com, “The industry has accelerated…from being a fringe movement among solopreneurs and freelancers to becoming one of the largest trends of the decade in commercial real estate. The industry doubled from 2015 to 2018, and analysts forecast over 1 million members in the United States alone by 2022, according to trade group Co-working Resources.”[2] This allows workers to:

• • Get away from their home office
  • Work in a more professional setting
  • Experience a ready-to-work environment with facilities, wi-fi, and an available staff to help with requests such as making copies etc.
  • Remain safe in an environment with controls in place to protect against Coronavirus
  • Save money vs. paying rent for a corporate real-estate office

2. Most businesses must be prepared to open at some point: Making the decision if and when to open is a tough one. Businesses will look at economic indicators to determine when that time is (ex. Have employees been vaccinated?). However, proper planning is critical to ensure a successful transition back to in-person working. Businesses must consider:

• • Re-entry planning:[3]
    • Develop criteria for who gets to come into the office and when
    • Identify which activities are critical
    • Develop communication strategies so that message reach all employees
• • Ensure safety protocols are in place[3]
    • Develop screening and safety protocols
    • Provide Personal Protective Equipment (PPE) to all employees
    • Provide adequate sanitation
    • Promote safe distancing within the office (including work and common areas

3. Businesses will have to pay attention to the employee experience:[3] How employees feel they are treated during this time will impact how they view your company, and who stays/leaves.

• • Remote work does not have to be a thing of the past. Enabling employees to work from home some of the time shows your flexibility and empathy towards their personal wellness.
  • Ensure you listen to your workforce to understand their concerns[3]
  • Consider providing a wellness concierge and onsite doctor[3]

4. Company culture will be even more important and will affect the need for corporate space: Ed Blake, the CEO of Culmen Real Estate, a large real-estate firm located in Dayton, Ohio, stated “…perhaps the biggest impact on companies is the difficulty in fostering a strong culture. Blake said it’s difficult to maintain a company culture when most, if not all, people are working from home, especially those who were just hired.” Companies with a social culture will suffer the most as they continue to host virtual interviews and virtual onboarding for new employees. This may even be true when a vaccine is administered publicly as people may still feel uncomfortable with physical contact in the near future. Rethinking whether the corporate spaces that they pay for are necessary will become important from a safety and a cost savings measure. Being creative with how much corporate space is needed and balancing safety with culture will be very important. 

5. Changed to corporate real estate trends will continue in the long-term: According to Ed Blake, the CEO of Culman Real Estate: 

• • “COVID-19 is reversing what had been a growing trend of open office environments that valued collaborative space over privacy. That’s changing, and Blake believes the trend reversal will continue for the foreseeable future.”[4]
  • What he feels is most problematic for a lot of reasons is the office because everybody had gone to more of an open landscape and packing people in smaller spaces. He thinks that’s going to change, and we’re going to start seeing people move back to traditional offices with more privacy, both for health reasons as well as productivity.”[4]“
  • The work-from-home model has been successful at many businesses, which means a potential reconfiguration of how people perform their duties on a daily basis.” This model has accelerated greatly under COVID-19, but he does foresee an eventual return-to-office trend on the horizon. However, Blake states, “I think there will eventually be a comeback to that as people figure out that it’s hard to reinforce culture and teamwork virtually,” he said. “So I think you’ll see an initial out wave, but you’re going to see, maybe a couple years down the road, your square footage-per-employee grow again.”[4]

Taking all of these predictions into account, it’s no wonder companies may feel overwhelmed with all of the decisions that need to be made in this COVID era. Employees health and well-being are at stake. Having a partner to aid with strategies and execution can be a great help.

Our team can support you through our Business Transformation Services, including Strategic Planning and Business Architecture, which are supported through our Technology, Information and Security Services. We will analyze your business model, the current business landscape, build a roadmap with your goals and objectives (operational and financial) and help you to implement them into your business.

Ensuring these changes are fully communicated and integrated into your organization are also important. Through our Organizational Change Services, we will help drive adoption, create strategic communications and design any necessary training to establish full integration in your business.

Please feel free to contact us at info@collectiveinsights.com for additional information.

[1] Long, Katherine Khashimova (2020, September 9) What will happen to Seattle’s empty office towers when COVID-19 ends? From https://www.seattletimes.com/business/real-estate/what-will-happen-to-seattles-tall-empty-office-towers-when-covid-19-ends/

[2] Davis, G. Brian 7 Alternative Real Estate Investments Most People Ignore (and How to Invest in Them). From https://www.moneycrashers.com/alternative-real-estate-investments/

[3] Deloitte Consulting COVID-19 implications for corporate real estate. From https://www2.deloitte.com/us/en/pages/operations/articles/covid-19-implications-for-corporate-real-estate-leaders.html#

[4] Bush, John (2020, November 24) Culmen CEO talks COVID-19 impact on commercial real estate industry. From https://www.bizjournals.com/dayton/news/2020/11/24/wwre-roundtable-ed-blake.html