2023 will be remembered as the year of the new normal. Throughout the Pandemic, we all longed for a return to a world we knew and trusted. If there is one thing we now know for sure, it is that the world we once knew has changed in many ways, and not all of them are for the better.
The world of commercial real estate is no exception. In 2023 we finally saw the beginning of the long-awaited return to the office and we now see the damage left in the wake of the Pandemic is considerable. Here in New Jersey, for example, we are seeing the resulting impact that work from home and hybrid work schedules have had on our office leasing activity. We real estate advisors joke that what was once an 80,000 square foot tenant is today a 20,000 square foot tenant, as more than half of the employees have demanded that they will now only work from home and even more companies have gone hybrid, with few folks in the office on Mondays and Fridays. At first all of this seemed like a workable idea with the chief advantage of a reduced footprint being the resulting reduced operating overhead.
So, aren’t savings in the office rent a good thing? If that were all there was to it, we would tend to agree, but employers are finding they are experiencing quite a number of unanticipated headaches, particularly with the younger employees.
Trying to train, supervise, manage, achieve productivity goals and motivate employees who are working from home has turned out to be a nightmare. How does the CEO communicate a corporate narrative to employees when they are working in their own bubble. How can companies create team synergies over a Zoom platform. How does a new employee learn his job and understand the corporate culture.
Is it any surprise that today’s younger employees have less corporate loyalty than ever before and that many like to switch jobs every few years just to shake things up. Trying to maintain excellence with a less than enthusiastic workforce is really quite a challenge.
Inside the office, many companies, to save even further on operating overhead have converted their once permanent office set-up to a more open hoteling platform. Hoteling is when an employee coming in to the office checks in at the front desk where they are assigned a seat for the day where their computer and phones are routed. In just the last year we see that many employees are starting to resist a return to the unpopular Dilbert style cubicle in favor of a more upscaled benching table. It seems that the fear of Covid 19 is fading into a blurred memory, at least as far as social distancing goes for the present.
For those companies that have returned to the office with full occupancy, they will quickly discover that the universe of available office space opportunities is shrinking. As the cost of new construction and rental rates continue to rise, business owners are finding that it is more important than ever to work with a real estate advisor who has his finger on the pulse of the market. We recommend you work with a tenant advisor to help leverage a better deal when renewing the lease or relocating the office and to protect you against the dangers ahead. Now, more than ever, you need to vet the financial ability of any perspective Landlord to complete new construction on time and on budget.
If all this has you somewhat concerned, as 2024 comes into view, maybe it’s time for you to get a lease tune-up. If this sounds like you, why not give us a call to find out why, at Dickstein Real Estate Services, “Our Difference Is Your Advantage®”.
Dickstein Real Estate Services
908-704-3500 ext. 11
Categorised in: Real Estate Markets