Post-pandemic real estate: What we're learning
Navigating our way through this unprecedented time has changed the way people conduct business operations forever. Extensive cleaning, social distancing protocols, and remote work strategies have altered the future of office space. Although remote work has proven successful in many facets, the need for a physical office space isn’t going anywhere according to industry experts. With COVID putting more of a focus on the digital tenant experience, we’re also seeing tech and commercial real estate cross paths in many areas. Below I cover Atlanta’s office and industrial market in a COVID-19 environment, as well as what we’re learning about post-pandemic real estate. Click Here for the full audio version on North Fulton Business Radio.
COVID & Commercial Real Estate
The pandemic has caused industrial activity to expedite as the percentage of people purchasing common retail services online skyrocket. With the average industrial user having a much lower density on the employee front, social distancing didn’t dramatically affect this sector as much as it did for office.
The office sector adopted the open office concept pre-pandemic and with 6-feet social distancing becoming the new normal, we see this continuing to play out.
The Need for a Physical Office
The office space is going to look and operate dramatically different going forward. However, after working remote for the past 6 months, statistics show that employees still want a place to meet, collaborate, and have mentorship. On average, business owner are discovering they can reduce their office square footage by about 25-30% with many employees continuing to work from home a few days a week.
Working Remote vs. In Office
Being forced to work from home has proven successful in some respects and more difficult in others. Teams who have previously worked together in-person have continued to do so remotely with a high degree of success. The real question is whether working completely remote will deem successful over time with hiring and retaining talent becoming more difficult.
A lot of times, companies underestimate how business operations might be affected because of remote work. Our Remote Advisory Services team can help you navigate your remote work strategy to make sure you are making proactive and wise decisions for your company as you adjust to the new normal.
Finding the Right Space
When searching for office space, the temptation is to get as small of a space as you can. However, that may be a much larger cost in the future if your space isn’t serving your employees. It’s important to think about the employees you already have, what you want your space to look like 3-5 years from now, and then team up with our Workspace Planning, Design & Support team to determine what your office footprint should look like.
COVID & Tech
If you look at the CRE sector in Atlanta, particularly office over the past 5-7 years, it has largely been driven by growth in the tech industry. With COVID putting more focus on the digital tenant experience, tech and commercial real estate have crossed paths with an increase demand in things like mobile apps for buildings.
COVID & Rental Rates
A large amount of sublease space hit the market in Q3 which tends to put pressure on the market. We also started to witness a slight increase in vacancy rates and a softening in rental rates.
Midtown historically has been one of the hottest markets over the past 5 years, so we expect it will experience one of the greatest pull backs. There is a lot of talk in the market as far as suburban sectors playing out well from the pandemic, so it will be interesting to see if the numbers support that down the line.