Real Estate Syndicator · Phoenix, AZ · Member since 2018 · 903 posts · 1k+ votes
Back March 31 2020, I wrote about a futuristic possibility of a "Convenience Revolution" similar to the Industrial Revolution, where employment and industries might experience a massive shift in employment sectors with the entire COVID pandemic.
It appears to be in full swing.
In fact, many companies have turned to having entire staff working remotely long term.
Recently, Twitter announced that all staff are "allowed to work from home permanently, even after the coronavirus pandemic lockdown passes."
Google and Facebook followed suit announcing all employees will or can work remotely until the end of 2020.
This has prompted other companies to set up permanent systems for security and longer term W@H scenarios.
Although I don't think we are there yet, the real implications for real estate appear to be regarding Commercial Real Estate with regards to office leasing and office real estate space.
Will office commercial space be next to see discounted prices as demand drops? Will large office leases be carved up into smaller spaces for different types of buyers?
What are the thoughts on this growing trend spurred by the pandemic but quickly becoming a longer-term decision?
I'm a multifamily investor rather than an office investor, so take this with a huge grain of salt.
I think it's really too early to know what the long-term looks like, what the trend really is.
In the short-term, though, I think office takes a substantial hit in price - mostly because of fears of it taking a price hit. It's the reverse of FOMO - fear of missing out. It's FOCAFK - fear of catching a falling knife. No one knows what will happen, but everyone can imagine the worst-case scenario, and that causes prices to drop.
I think that, long-term, there will be an effect for sure, but the question is how big? Companies are now set up for more people to work remotely, and many have lost their fear of letting their employees work remotely. Some companies may move to hot-desk plans where you just have a desk at the office when you need to be there. That will have some effect on demand for office space for sure.
On the other hand, not everyone actually likes working remotely. People like to meet their colleagues and not everyone wants to be at home or has a comfortable workplace at home. Cynically, I also think that the most ambitious employees will want to be in the office where they can cozy up to the powers-that-be and brown-nose more effectively.
And, to the extent that people want to be in the office, Covid may be the moment when people realize that the open-plan office is a great failure and a destroyer of productivity, not to mention a spreader of germs. We will see a move back to cubicles and even offices, which take up more square footage than open-plan.
So, we could see fewer people in the office but more square footage per employee, and who knows how that cuts?