Watch Alec’s very interesting What_I_C_atPVC video here. #CRE #Office #Market
We made it. Against all odds, loads of anxiety, and a solid amount of fear, the world is emerging out of the pandemic’s lockdown status. While the virus is certainly not south of us yet, markets across the country are starting to reopen – slowly but surely.
This development is met by mixed emotions from all directions, but progress is being made one step at a time. During a trial and error period like this, every market can learn something from those bold enough to make the first moves.
Here are a few post-closure lessons we can learn from the markets that have already reopened.
“Stay at Home” to “Safer at Home”
After 10+ weeks of strict stay-at-home orders, states transitioned their official status to a ‘safer at home’ model. Georgia was one of the first to make the jump, but many followed in their lead shortly after.
By the end of April, Alabama, Alaska, Colorado, Texas, Idaho, Mississippi, New Hampshire, and a handful of other states had made the switch. The ‘safer at home’ approach is outlined by the gradual reopening of public businesses and commercial areas, but COVID-19 is still top of mind. Local authorities are encouraging citizens to keep their outings to a minimum, and safety protocols are still being enforced.
May saw more and more markets reopen, including Florida, Rhode Island, Maryland, Washington, Vermont, and even New York. All other states have reopening dates scheduled for June/July, but everyone’s looking at those who’ve been open for advice on how to deal with the challenges posed by the post-pandemic world.
These 4 strategies are helping people stay safe while going about their (new) normal lives.
1. Social Distancing
One thing that’s been demonstrated by the open states is that social distancing is here to stay. Whether you’re popping into a store or walking the shoreline, signs reading ‘social distance – 6 feet’ are posted everywhere.
Many stores, such as Whole Foods, are limiting their overhead capacity to ensure that indoor traffic doesn’t pile up. Seeing people wait in lines with a few feet in between each group is helping mitigate the risks and help citizens feel safe about venturing into the world.
2. Requiring PPE
Masks, gloves, and hand sanitizer – check. These three items are accompanying the classic phone, wallet, and keys ‘leave the house’ checklist.
Indoor stores, restaurants, and small businesses are requiring visitors to wear the proper personal protective equipment to limit the spread of germs within the space. Keeping things clean to consumer standards isn’t easy, but this step is reaping positive results.
3. Open Air Environments are Key
Outdoor attachments to commercial spaces have never been more valuable than they are today. Many commercial tenants are expanding these outdoor spaces. In some metropolitan areas in Miami, they’re even closing street-traffic to accommodate street-seating.
Commercial tenants need to literally think outside the box to make reopening work.
4. Spatial Requirements
All in all, it’s clear that CRE’s tenants are updating their spatial wishlists. Some businesses are closing up shop and pulling out of their leases, while others are looking for new spaces that can better meet their needs in the post-COVID world.
CRE pros, get ready to offer creative solutions to all the curveballs that are on the horizon.
As WFH continues to dominate today’s business scene, offices are facing many unprecedented challenges. Teams are teleworking, the office space is snoozing, and even after two months, there’s no official word yet on when things will be back to ‘normal’.
With uncertainty on the radar and no clear end to COVID-19 in sight, office lease renewals will definitely pose a challenge for many landlords and property owners. Let’s take a deeper look at the details to gauge exactly what the industry is dealing with:
A real estate field can only be as strong as their tenants – and right now, the office pool is in the weeds. With the economy slowing down due to coronavirus implications, many companies aren’t seeing the gains they’ve gotten used to during the United States’ longest streak of economic expansion – that we’ve just fallen out of.
Resultantly, a substantial number of office tenants may not be able to renew their leases. Some companies are taking a break to see how things play out, but others are calling it quits altogether. Others are skipping out on rent altogether, causing serious cut-backs into rental profits.
Tenants who are maintaining a strong stance may be wary about returning to the physical workspace, and this extended bout of remote working is offering perks that are changing the ways companies perceive the necessity of a leased office space.
The coronavirus took a considerable toll on the office sector, and it’s going to take a lot to get everyone back on their feet.
The Tomorrow of Office Leasing
In today’s market, any tenant is a good tenant. Flexibility is the key to riding out the pandemic successfully. Property owners will need to reconfigure their normal protocols to account for the current status of business markets.
1. Communication is Key
Touching base with your tenants is a must as communication will make all the difference. If you know what your tenants are going through and what they’re near future looks like, you can adapt as needed, or plan for a strategy pivot. Getting caught off guard with a last-minute lease cancellation is the last thing any property owner wants right now.
2. Supply Outweighs Demand
For landlords with vacant units on their hands, the same level of tolerance is required. The market will likely shift into a new balance of supply and demand – where the supply outweighs the tenant population. If this comes into play, landlords and property owners can expect the competition to skyrocket as more and more listings hit the market.
3. Win Tenants Trust Back
Office owners will need to bring their A-game to win over tenants. Besides a winning-attitude characterized by patience, understanding, and adaptability; landlords shouldn’t hesitate to flex their office-upgrade plans. The ability to meet the market’s pain points will play a huge role in appealing to office tenants.
4. Re-Assert the Value of Your Asset
Get your office space ready for the return to work by throwing in some incentives, like discounted WiFi packages or utility bundles, to sweeten the deal. Consider new amenities and interior designs that can make your office space shine.
Offices are certainly navigating unknown territory, but an optimistic and confident approach is the first step to staying afloat until COVID’s waves calm down.
Catch Alec’s latest video here. #CRE #NAIPVC
By: Alec Pacella, CCIM
NAI Pleasant Valley
23240 Chagrin Blvd., #250
Cleveland, OH 44122
NAI Pleasant Valley is proud to announce the recent sale of the 2700 Cory Ave property in Akron. The 7,036 sq/ft building sits on approximately 5 acres. The site will be the new home of Hercules Tree Service.
Scott Raskow and Bob Raskow, SIOR represented the seller in the transaction. This sale had begun at the beginning of the Covid-19 outbreak, closing in a rather quick time frame. This shows that certain markets are still very active, despite the pandemic.
About NAI Pleasant Valley
NAI Pleasant Valley is the Northern Ohio office of NAI Global, a leading global commercial real estate brokerage firm. NAI Global offices are leaders in their local markets and work in unison to provide clients with exceptional solutions to their local and global commercial real estate needs.
To learn more, visit http://www.naipvc.com