Thanks to the pandemic, working from home has become a full-fledged reality. The fact that a number of big companies are planning on keeping remote work after COVID-19 should strike fear into the commercial real estate space.
While there are many positives, most likely for the employees and their employers, there are also negatives. The negatives are likely to be felt majorly in the commercial real estate space. Here are some of the negative impacts that are likely to be felt.
Traditional Offices Are No Longer Desirable
Having a number of workers meant having a large office to accommodate everyone. At the moment, with the rise of remote workers, the traditional office is less desirable. It is also considered quite expensive as brokers have been overcharging clients. Where an employer would have needed a large office for operations, that need has suddenly gone. And with it, the revenue from the rent that would have been collected gone too. Also, contracted cleaning service providers will lose that stream of income.
Short Leases Are Now A Norm
Speaking of lost revenue, short leases are now the norm. Whilst before, leases were based on a monthly or yearly agreement, which was expensive and unnecessary, today it’s different. A number of clients are now leasing on an hourly and daily basis. Most clients are choosing this option as it gives them the flexibility to work within their requirements. They only need the office when they need it, and it gives it back at the end of the day or week. There’s no being tied down to space when they can get a better view for their next meeting.
To keep up and have clients in the building, most commercial real estate agents are looking to add comfort. But to drum up and keep business in the space, the comfort of owning the best office desks Auckland has comes at a price. It means high-end furniture has to be fitted, facilities need to be top-notch, as well as decorations. Another thing is that the office should not be the formal set up offices were used to. This means where a desk and chair would have fit, a bean bag can be used instead.
According to Cushman & Wakefield, the US, in 2021, will lose approximately 145 million square feet of office space. The demand for space per employee has significantly gone down. This is due to more remote workers coming up in the year. You don’t need to be a genius to figure out that the country’s overall economy will be affected by this loss. And while it benefits a good number of employers to have more money in their pockets due to reduced space, the negative space isn’t a healthy setup for any country.
It doesn’t mean that commercial real estate has come to an end with the remote workers’ trend. But there are a number of negative impacts that the idea has brought about. Here are just a few of them, and the negative trend doesn’t look to stop anytime soon.