{"id":1004576707,"date":"2022-04-28T09:14:22","date_gmt":"2022-04-28T17:14:22","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004576707"},"modified":"2023-01-27T09:16:05","modified_gmt":"2023-01-27T17:16:05","slug":"sior-asks-is-this-the-great-office-wait-or-the-great-return","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/sior-asks-is-this-the-great-office-wait-or-the-great-return\/","title":{"rendered":"SIOR Asks: Is This the Great Office Wait or the Great Return?"},"content":{"rendered":"

This article first appeared in the SIOR Report Magazine<\/a>.<\/em><\/p>\n

Is the \u201cGreat Wait\u201d for things to return to business as usual finally over, or is COVID-19 still rearing its ugly head? Well, that seems to depend on who you are and what your business is. For some SIORs and their service-oriented clients\u2014attorneys, accounts, etc.\u2014things are most definitely at least back to a \u201cnew normal.\u201d Though such pandemic remnants as hand sanitizers and masks can still be found in workplaces around the world, and virtual meetings are likely here to stay, people have returned to their offices (if they ever truly left). On the other hand, larger corporations are moving much more slowly, with many taking a \u201chybrid\u201d approach when it comes to having their employees in the office. And with the emergence of the omicron variant, some that planned a January re-opening are taking a \u201cwait and see\u201d approach\u2014at least for the short term.<\/p>\n

\u201cIt\u2019s a changed framework,\u201d says Frank Martin, SIOR, senior associate broker with Hall Associates, Inc.<\/strong>, in Roanoke, Va. \u201cMy clients are not at full density.\u201d As far as his own firm, however, he says \u201cEveryone feels much better from an organizational standpoint to have people under one roof, trading institutional knowledge.\u201d<\/p>\n

\u201cOur brokerage team was back operating essentially full-time in the office by May or June of 2020,\u201d says Andy Westby, SIOR, president and managing broker of Goldmark Commercial Real Estate, Inc.<\/strong>, in Fargo, N.D. \u201cWe have room to distance in our own offices, and our clients generally prefer more face-to-face meetings than virtual interactions.\u201d Agents can set their own schedules, he notes, but adds that, in his opinion, the most productive ones choose to be in the office on a full-time basis.<\/p>\n

\u201cOur team is back in the office, and it has been for over a year,\u201d says Adam Kaduce, SIOR, R&R Real Estate Advisors<\/strong>, Des Moines, Iowa. \u201cWe have found that having our team members together has brought new opportunities and new customers, and we have not had any health or safety issues.\u201d He adds that his industrial and flex tenants are back in the office, and most never left. \u201cOffice is the slowest type of space to return, but 60 percent of our office customers are back in the office.\u201d<\/p>\n

\u201cMy people are back,\u201d asserts John Culbertson, SIOR, manager at Cardinal Real Estate Partners LLC<\/strong>, Charlotte, N.C. \u201cMost people I know in commercial real estate\u2014developers, investors, brokers, attorneys\u2014the breadwinners, the stars of the office, never left. It seems like the more salaried types in supportive, administrative roles, left and worked remotely, but if it\u2019s a healthy, small- to medium-sized business, they are back in the office.\u201d He adds that his large headquarters and corporate clients, like Bank of America and Wells Fargo, are \u201cnot back to normal\u201d but that their leadership is.<\/p>\n

\u201cWe don\u2019t have a protocol; everyone can do as they want,\u201d shares Hans-Ulrich Berendes, SIOR, with Berendes & Partner Consulting<\/strong> in Hamburg, Germany. \u201cBut bigger companies have to be more formal. Siemens says people can choose two to three days to stay at home. Others say part of the company can come in Monday-Tuesday, the others Wednesday-Thursday, and organize day-per-day.\u201d<\/p>\n

Louise Frazier, SIOR, president of Blue Ridge Realty Inc.<\/strong>, in Knoxville, Tenn., says \u201cThe Great Wait\u201d is most definitely not over. Her company manages and leases about 600,000 square feet of Class A office space in Knoxville, and about 50,000 square feet of specialty retail centers. Of those, she notes, \u201cThere are about 30 percent of the employees actually in occupancy in those offices, although the properties are 95 percent leased at this time.\u201d Most of her tenants, she adds, are regional offices or headquarters for major corporations. However, the trend for smaller tenants in those buildings is to be almost entirely back at the office full-time.<\/p>\n

\u201cMany [larger clients] had recently planned for most of their employees to return in January (after postponing a return to the office in September) on a flexible basis,\u201d she continues. \u201cHowever, the omicron variant is starting to wreck those plans for the corporate user. I think we are going to see some version of the work-from-home stretching much into 2022.\u201d<\/p>\n

\u201cOur business is a people business,\u201d notes Grant Pruitt, SIOR, president & managing director of Whitebox Real Estate<\/strong> in Dallas. \u201cIt\u2019s a real struggle to be able to communicate in a virtual environment.\u201d<\/p>\n

Law firms are in a similar situation, he adds. \u201cIn Houston, 53.6 percent of firms are back in the office, but it\u2019s 77 percent of law firms,\u201d he shares.<\/p>\n

Interestingly, Colliers<\/strong> seems to be the lone CRE firm of those contacted that is not fully back in the office. \u201cColliers has very strict protocols,\u201d shares Jeffrey Weil, SIOR, executive vice president in Walnut Creek, Calif. \u201cIn the beginning, we totally shut down, and re-opened under strict rules\u2014masks in the office, social distancing, temperatures, extra cleaning, a health check\u2014and some of us have HEPA filters running 24\/7. There are no visitors allowed\u2014even now. Broker open houses, which had been stopped for a while, are now \u2018distant,\u2019 with masking.\u201d<\/p>\n

While things among tenants loosened up last summer, that changed with the delta variant, he says. In San Francisco, Weil notes, 25 percent of employees have returned, with some other cities in the 35 percent to 40 percent range.<\/p>\n

What’s ‘Normal’ NOW?<\/h1>\n

Even in markets where many clients are back in the office, experts note that things are different. \u201cCorporations will continue to transition to a hybrid environment and move away from the totally open concept\u2014which has been the trend for the past 15 years\u2014to a blend of collaborative space and private offices,\u201d says Frazier. \u201cMany companies may keep their current footprint but renovate to accommodate the \u2018new normal.\u2019 All companies are feeling pressure to allow continued flexibility in work schedules, but they need to see an increase in productivity.\u201d<\/p>\n

\u201cI\u2019m building a new building for a shipping industry client and we\u2019re discussing the fit-out\u2014how many cells, group rooms, [and] social space. It is changing,\u201d says Berendes. \u201cPeople want to have meeting possibilities, so it has to be flexible. Desk sharing will be a real topic for the future, so you do not go every day to the same room and the same desk. You may have to go on the internet to make a reservation. Companies calculate about half their employees might be at home two days a week.\u201d<\/p>\n

\u201cI\u2019m working on a Class-A office deal now with a large consulting firm, and the floorplan almost feels like a coffee shop,\u201d adds Culbertson. \u201cWhat they\u2019re trying to do is create a place for people with flex days, so when they want to be in the office it\u2019s very informal\u2014lots of food, lots of services.\u201d<\/p>\n

\u201cMost of the employers in our market have re-opened their offices and are having employees work in the office full-time, or on hybrid schedules,\u201d says Kaduce. \u201cIt appears that will be the new normal, with employees having greater flexibility on when they are in the office. Our customers have embraced a variety of hybrid models, but most require attendance in the office two to four days per week.\u201d<\/p>\n

Most of his meetings, he adds, have returned to in-person, \u201cbut we have embraced Microsoft Teams for meeting with those customers located out of town.\u201d He says his office has also increased usage of Teams for sharing documents and presentations \u201cto create more collaboration with team members and customers located in different locations,\u201d and will continue to do so.<\/p>\n

\u201cI think we are back to a new normal,\u201d says Westby. \u201cWe do have some clients that now prefer to meet virtually or are more open to handling business or contracts electronically. We have a full set of tools available to us now to conduct business [both] virtually and in-person that were not perhaps as commonly used \u2018pre-COVID-19.\u2019 We are also experimenting with new marketing approaches that may reduce the need to physically tour spaces\u2014which could help speed deals up and qualify real prospects from pretenders faster than before.\u201d<\/p>\n

\u201cDocuSign is huge,\u201d notes Weil. \u201cVirtual 360 tours are huge. There\u2019s less use of hand sanitizers. There\u2019s going to be more use of Zoom and Microsoft\u00ae Teams, but not exclusively.\u201d<\/p>\n

He says he got a new laptop because of COVID-19, and now has a state-of-the-art home office. \u201cOur dress is more relaxed,\u201d he adds. \u201cI used to wear a coat and tie in meetings; now, it\u2019s just a sport coat. I\u2019ve even gone to meet people wearing jeans.\u201d<\/p>\n

\u201cI would say we\u2019re back to a new normal,\u201d says Martin. \u201cWe have a different mask protocol\u2014in the office with a mask, and maybe the option for people to work from home more than one day a week if they feel it\u2019s necessary.\u201d<\/p>\n

In addition, he says, smaller operators (2,000-3,000 square feet) may have some uncertainty on how to use their space going forward, although \u201cthat\u2019s not true with the ones that are growing.\u201d<\/p>\n

Looking Ahead<\/h2>\n

It\u2019s clear that some of the changes in CRE that COVID-19 has \u201cwrought\u201d have become a permanent part of the landscape, according to SIORs. For example, \u201cEvery lease done in the last year and a half has added pandemic language for force majeure [clauses]; that will stay with us forever,\u201d says Martin.<\/p>\n

\u201cI think it\u2019s really smaller things\u2014hand sanitizers, having more day porters in terms of cleaning staff; I don\u2019t know if we\u2019re ever going to go back to being OK with filth,\u201d says Pruitt. \u201cAir filtration systems are here to stay, with cleanliness as a general rule of thumb.\u201d<\/p>\n

\u201cWe are watching the next generation of design trends and their impact on office space design,\u201d adds Kaduce. \u201cWith hybrid office occupancy, the outcomes that customers are looking for from their space have changed. We are seeing spaces that look more like airport lounges, with a variety of drop-in spaces and isolated spaces for heads-down and collaboration. Many of these don\u2019t have reserved workspaces for every employee, and fewer private offices are planned.\u201d<\/p>\n

With virtual meetings becoming the everyday norm, internet security will become \u201ca great problem for the future,\u201d says Berendes. \u201cI had a conference call this morning, and after 10 minutes they asked if I was having problems with my computer,\u201d he shares. With continuing health and safety concerns, he adds, he predicts offices becoming \u201csmarter,\u201d with technology, for example, that will enable you to open a door without touching it.<\/p>\n

Weil agrees. \u201cWe\u2019re coming in with a lot of safety\u2014health ventilation, filter systems, not having to touch a door to get in, or elevator buttons\u2014and taking advantage of technology to make them healthier and safer buildings,\u201d he says.<\/p>\n

Frazier says that the recent growth in the power of her clients\u2019 employees may have sprung from the pandemic, but it is going to continue in the future. \u201cIn discussions with the managers of these corporations, they do not think that employees are at their most productive continuing to work solely from home, but they feel compelled to have flexibility in order to keep employees,\u201d she notes.<\/p>\n

Frazier adds that at some point there is going to be a demand from the corporate executives to return to pre-pandemic status, but flexibility and transparency will need to remain. \u201cEmployees will want to see that the company leaders are also coming into the office to work and not Zooming in from their luxury vacation homes,\u201d she observes. \u201cThe sense of fairness for workers has been heightened during this chaotic pandemic period, as have the issues of equity and inclusiveness. These are fundamental changes that are going to impact the office environment moving forward.\u201d<\/p>\n

Steve Lewis<\/a> is a freelance writer and president of Wordman Inc.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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