09 Jun The Market for Office Spaces in 2020
The Current Landscape for Office Spaces:
COVID-19 is a global pandemic that has taken an impact on all individuals, businesses and society as a whole. From individuals to businesses, this pandemic has changed the game plan for many.
The real estate industry has constantly faced challenges head on during economic uncertainty. As the health crisis continues rental spaces for offices will be changed forever.
How will it affect the Real Estate Market?
Amidst this outbreak, companies have been forced into new means of adaptability. Many knowledge workers are currently working from home productively. This has surfaced speculations of whether or not office spaces are truly necessary. For offices have helped foster company culture and productivity.
Twitter CEO, Jack Dorsey, emailed Twitter Staff on May 12th, 2020. His email read “The past few months have proven we can make that work. So if our employees are in a role and situation that enables them to work from home and they want to continue to do so forever, we will make that happen. If not, our offices will be their warm and welcoming selves, with some additional precautions, when we feel it’s safe to return.”
Many other big tech companies such as Google, Apple, Facebook and many others have spent billions on office space in recent years. However, they may follow in Twitter’s steps and allow telecommuting permanently.
Office space constructing and budgeting account for billions when new infrastructure is being built. Social media giant, Facebook, currently has 1 million square feet of office space in New York. In a recent interview with The Guardian, Facebook CEO, Mark Zuckerberg, stated “the next 5 to 10 years, about 50% of our people could be working remotely.” With more companies allowing employees to work remotely from home, the dynamic of the New York City Market office will surely be impacted.
There are still many challenges of working from home. Fostering an environment of interdependent work and team management can be difficult. Office environments and human interaction is also critical. These factors could impact a likely comeback. Landlords across the nation have also become more flexible with their leasing options to accommodate their tenants best with all the economic uncertainty. StreetEasy data has shown an increase of 70% in month to month leases. Bill Rudin, head of Rudin Management and the chair of the Real Estate Board of New York, stated in an interview on the Real Deal “on rent collection, we’ve done surprisingly well.”
During sudden changes, adaptability is key. New York City and the nation have faced economic uncertainty and have been resilient. Experts believe that new innovative ideas, companies and business will resurface to replace and boost the rentals of many retail and office buildings. For now, it is too soon to determine what’s next for office spaces.