As we go through each day during this unpredictable COVID-19 pandemic we ask ourselves many questions. Will I get sick? Will a loved one get ill? How many died today? Is my job still safe? How can I find a new job? What type of businesses are suffering? How will the education system be impacted?
Our question today asks, what impact is this Coronavirus having on corporate and business office space? Due to the fact that “about half of U.S. employees worked from home during the COVID-19 shutdowns” (USA Today), we ask ourselves, does that mean that companies are reducing the size of their office space since it is no longer being used? While people are working from home successfully companies may want to save money on office space rent payments.
As time continues, Americans, and the rest of the world, continue to adjust to the “new normal”. Which still includes many companies allowing at least some of their employees to work from home. Companies are even “embracing remote work” according to Victor Calanog. Calanog is the “head commercial real estate economics at Moody’s Analytics” (USA Today). Therefore, Calanog predicts that office rentals should decline 10.5% this year. He anticipates that the rates in larger cities with fall more sharply, this includes a “20.3% plunge in New York City”. Lastly, he expects that office building “sale prices” should begin to “tumble” (USA Today). Very simply put there may not be a need for office space as much anymore.
The CEO of a medical records company in Nashville, Elliot Holt, has typically been “firmly opposed to letting employees work from home” (USA Today). Prior to the pandemic Holt’s company MediCopy was growing at alarming speed pushing Holt to add a second office building and begin to lease a third. However, the virus forced the majority of MediCopy’s staff to work from home. This led the CEO to change his standing on telecommuting. In fact, he relinquished both of his additional offices. Ultimately, saving him “$350,000 a year in leasing costs” (USA Today).
Paul Davidson with USA Today discusses the reopening of businesses and the return of white-collar workers back to the office. He mentions that “about half of U.S. employees worked from home during the Covid-19 shutdowns” (USA Today). Several companies including “Facebook, Google, Twitter and Morgan Stanley even plan to continue allowing staff to telework at least some of the time” after the health crisis has settled (USA Today).
This type of action by businesses could mean major downsizing in the office market, which is a $2.5-trillion market. In addition, this could also lead to a shift in restaurants, retail, and bars that surround urban centers. Although, some companies may be headed towards more employee remote work, professionals do not see a future where the office market completely dies.