As we pass the Pandemic’s one-year anniversary we are approaching the end game. Office tenants are truly at a crossroads, and the CEO’s at these companies are about to face some critical decisions.
Real estate is an industry with many different sectors and the effects of the lockdown have in no way been consistent from sector to sector. For example, we see that the industrial sector has never locked down or missed a beat as manufacturing and distribution facilities have been in continuous operation throughout. Medical offices, while briefly shut down, are now back to robust in-house operations, albeit with sanitary and social distance protocols. The retail sector has been the sector most cruelly divided into winners and losers. The large food market stores were permitted to remain open while smaller nonfood stores and also restaurants were shut, They have only recently started coming back to viability. As new Covid cases plumet the Governor has finally started relaxing the restictions at an excurciatingly slow pace. Most startling has been the exodus of homeowners and businesses from nearby Manhattan leading the NJ Residential sector to explode. With inventories tight we note that prices are up by more than twenty percent year to year.
New Jersey Office Space:
As we pointed out in our last month’s issue, the majority of large office tenants in New Jersey, after more than a year, are still not back in the office. The game changer, as we see it, is that within the next 90 to 120 days the majority of the folks in New Jersey are predicted to become fully vaccinated. The question we are asking is– now what?
Here we see two very different visions.
VISION ONE– Vision one is taken by the large furniture companies such as Herman Miller, Inc, Steelcase, Knoll, and Kimball International. They see office tenants willing to make major investments in office redesign and renovations with permanent sanitary protocols. To help their customers achieve this, they have added to their furniture inventory a whole new line of items such as privacy tents, small individual teepee like structures surrounding open space workers, portable nooks, mobile easels, and huddle tables all designed to permit safe social distancing within an open landscaping concept.
VISION TWO– Vision Two CEO’s are betting that employees, after receiving the vaccine, will want to return to the office, and they are not planning to make the major renovations like those suggested by vision one CEO’s. They are betting that, over time, the majority of office employees will be thrilled to come back to the office, particularly if schools open up in September and as such they are not focused on any major changes to the office, if they can help it.
So how will work from home come to affect the workplace? According to KPMG’s Outlook Pulse Survey only 17 percent of those companies surveyed are now planning to downsize while just a few months ago this number was over 70 percent, a positive change I would say.
Even the vision two CEO’s admit that coaxing employees to come back will take time. Many are even considering the creation of a hybrid model shuffling work from home and work in office on different days of the week. When polled right now, only 23 percent of employees currently see the office as their primary workplace, so there is a long road to travel.
Things as we see them are still evolving. We are clearly in uncharted territory. What should you be doing?
We recommend that you work with a real estate advisor to help you with creative real estate solutions to enact your vision. Call us to to find out why, at Dickstein Real Estate Services,
“OUR DIFFERENCE IS YOUR ADVANTAGE” ®.
Categorised in: Real Estate Markets