February 24, 2021
Your monthly news & updates
MHN
The true impact of the pandemic on commercial real estate will likely transpire this year, the firm’s latest report predicts.
MHN
These markets accounted for more than 80 percent of the nation’s sales volume for office assets last year.
Bisnow
NAR’s Federal Advocacy team has been working closely with Congress and the Administration to ensure the interests of REALTORS®, their families, consumers, and the entire real estate industry are protected in any federal action in response to COVID-19.
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How has the Covid-19 pandemic affected the use of office space?
Many tenants are realizing that they are able to “somewhat successfully” work remotely and as such, are doing so. What I am seeing is the fact that they may be able to work remotely, yet there are a certain percentage of the employees that would prefer to be back in office in order to continue the office camaraderie and office culture.
I'm hearing that they don't think it is 100% ideal to work remotely, and would prefer some type of schedule where they are in the office two or three days and working remotely the other days of the week.
Employees generally like to interact and collaborate with their fellow employees and doing this via Zoom, while practical, it is not always their desired mode of interaction.
I'm seeing companies that I'm representing downsize when their lease comes up for expiration. I just represented a law firm that determined many of the staff can fairly effectively work remotely and as such they cut their rental expense by 32%.
The technology firm I just finalized a transaction with decreased their footprint by approximately 47%. They ended up giving one of the suites that they were occupying back to the landlord and expanded a bit in their other suite. The landlord was able to keep an excellent tenant, and the tenant saved loads on their rental expenses.
Regarding lease rates, at the moment landlords are not decreasing the face rate; what they would rather do is provide more in the way of a tenant improvement allowance, free rent, parking concessions, etc.
I suspect, when more sublease space begins to comes to market, landlords will have to adjust their thinking in order to compete with this additional inventory.
These are interesting times! If your office lease is expiring in 2021 to 2022, now is the time to begin your planning.
-Randolph T. Mason, CCIM, SIOR
