Once again, it’s too soon to gauge when tenants will return in large numbers. As recently as last spring, 44 percent of tenants surveyed in a study commissioned by Building Owners and Managers Association International said that they expected to return to the office<\/a> during the second half of 2021.<\/p>\n The Meridian Group\u2019s 700 K St. property in Washington, D.C., was Fitwel\u2019s 2021 Best in Building Health winner for highest scoring Viral Response module. Image courtesy of The Meridian Group<\/p><\/div>\n But in many cases, the Delta virus has thrown a wrench into those plans. While some owners are proceeding full steam ahead, other office users have renewed misgivings. Amazon, Apple, Dell, Lyft and Microsoft and other major corporations made late-summer decisions to postpone the return to in-person work.<\/p>\n Drew O’Connor, Cushman & Wakefield<\/p><\/div>\n For those tenants who do return this fall, hybrid work schedules will typically be the name of the game. Companies large<\/a> and small have adopted flexible schedules allowing employees to work from home part of the time to ensure employees\u2019 safety and health and in light of the uncertainty of the virus.<\/p>\n \u201cWe think that the new norm will be a bit of a hybrid,\u201d said Cushman & Wakefield\u2019s Drew O\u2019Connor, who serves as senior managing director of asset services for the firm\u2019s New York City region. Participants in the BOMA study found that the average number of workers in the office full time would drop from 70 percent before the pandemic to 43 percent over the next 12 to 18 months.<\/p>\n Another factor is the widespread emergence of the Delta variant, which did much to produce the surge of new cases over the summer. As a result, workers\u2019 comfort in returning to the office plummeted, according to a survey by market research company Morning Consult. Just 55 percent of remote workers felt comfortable going back to the office as of Aug. 11, compared to 73 percent a few weeks prior. The number was the lowest since April, according to the firm.<\/p>\n More natural light and air are sought-after amenities in office properties. Image courtesy of Accesso Partners.<\/p><\/div>\n Tony Clasen, Accesso Partners<\/p><\/div>\n By now, owners and operators have gotten the hang of new protocols surrounding cleaning and sanitizing office spaces. However, new challenges have arisen. For many operators, staffing their properties is now the biggest hurdle to reopening. When nationwide shutdowns emptied out office buildings, janitorial staff and security contractors were often the first workers let go.<\/p>\n As owners prepare to welcome back tenants, a nationwide labor crunch is pointing to more competition for talent and higher costs. Wages and salaries for all real estate workers ticked up 1.2 percent during the three months ending in June 2021 and 2.4 percent from June 2020 through June 2021, the Bureau of Labor Statistics reported.\u00a0 <\/strong><\/p>\n Accesso Partners, a manager, owner, and operator of office properties totaling 16 million square feet across the country, has struggled with staffing at some of its buildings, said Tony Clasen, the firm\u2019s national director of operations. Filling positions that pay an hourly wage is particularly challenging.<\/p>\n Kimberley Morgan, Stream Realty Partners<\/p><\/div>\n \u201cWe expect we\u2019ll have to pay more money for those services,\u201d said Clasen\u2014somewhere on the order of 16 percent to 18 percent, he estimates.<\/p>\n Labor shortages are prevalent across the country for commercial properties, as they are in other industries. One of the biggest reasons? A mismatch between unemployment benefits and current hourly salaries often makes it more attractive for workers to stay at home, noted Kimberley Morgan, managing director of property management at Stream Realty Partners.<\/p>\n In April 2020, shortly after the onset of the pandemic, the unemployment rate spiked to 14.8 percent. While that figure had dropped significantly to 5.4 percent by July 2021, it is still elevated from the pre-pandemic rate of 3.5 percent in January 2020, according to the Bureau of Labor Statistics.<\/p>\n \u201cEveryone\u2019s looking for workers, but it\u2019s more cost-effective for them not to work,\u201d said Morgan.<\/p>\n A vision of the office of the future. Image by Alissa Johnson of the Center for Active Design<\/p><\/div>\n Operators must also grapple with rapidly changing patterns of energy use. In mid-March of 2020, when shutdowns quickly took hold across the U.S., offices resembled ghost towns. While many buildings were still open to some degree, or at least partly staffed, energy consumption plummeted.<\/p>\n Steve Core, RiverRock Real Estate Group<\/p><\/div>\n An analysis of the portfolio managed by Cushman & Wakefield in the New York City metro area showed that energy consumption was down at least 20 percent last year, and at some properties, upward of 40 percent. The dip was mostly due to reduced plug loads, particularly demand from lights and computers. However, the new standard of bringing in fresh air and improving ventilation led to increased power use on the base building side. With many tenants returning on a hybrid schedule, overall energy usage could still trend downward for the long term.<\/p>\n \u201cBefore COVID, densification (of office workspaces) was the key,\u201d said O\u2019Connor. \u201cI think we\u2019ll see a little bit of a pause on that process for a while, which should bring down energy costs.\u201d<\/p>\n In newer or retrofitted properties, operators have been able to shut down portions of the buildings that have remained vacant throughout the pandemic, reducing energy usage and producing savings for the owner.<\/p>\n Irvine, Calif.-based RiverRock Real Estate Group was able to shut down entire unoccupied floors of some of the office buildings, as well as elevator banks that aren\u2019t needed.<\/p>\n \u201cAnything we could do to save energy costs with no inconvenience (to) the staff or tenants,\u201d said Steve Core, the firm\u2019s president. \u201cThere\u2019s always a fine balance between customer service and efficiency. With all those tenants paying full rent, we want it running at capacity.\u201d<\/p>\n The newly renovated Crystal Court within the IDS Center in Minneapolis, the largest office property in the city. Image courtesy of Accesso Partners.<\/p><\/div>\n If there\u2019s anything the experience of COVID-19 has taught the real estate industry, it\u2019s to be prepared for change at a moment\u2019s notice. For Morgan, that means making time to watch out for your employees.<\/p>\n![\"\"](\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2021\/08\/The-Meridian-Group-Portfolio-Washington-DC-VA-MD_courtesy-of-meridian-group.jpg\")
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<\/a>Labor squeeze<\/h2>\n
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<\/a>Energy ups and downs<\/h2>\n
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<\/a>Worker well-being<\/h2>\n
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