Monday, April 15, 2024

What is the ‘new normal’ for commercial real estate?

by BIZ Magazine

The COVID-19 pandemic disrupted many things over the past year, but perhaps none of them more than where and how employees work. Shutdowns and shifting to remote work to avoid exposure to the disease has accelerated some technology trends that are making work from home the new normal.

The current work atmosphere is that some businesses are waiting out the pandemic by adopting a full work from home policy, others are bringing in half the office on alternating days, and some are bringing in the entire office as normal until there’s a positive case.

Shane Cheatham, realtor and owner of 318 Real Estate, said he has seen many businesses transition their employees to working from home and believes this trend will continue. 

“Many of the employees are working from home instead of the cubicle farms. This trend will mean we should see many larger office spaces down size and we will see more office space for lease or for sale in our area,” he said.

Robin Williams, with GDIT in Bossier City, is one of those workers who has shifted to having her home become her new office.

“It is important to recognize that we, as a workforce and society, came to understand we can function with remote working situations. Before COVID, people were afraid that work quality would be sacrificed if we allowed remote work,” she said.

Since shifting to remote work in March 2020 due to her employer’s concerns over the COVID pandemic, she utilized modern video call tech to adjust quickly to this “new normal.”

“I feel that I have become more productive because there are fewer physical office distractions,” she explained. “It has given me the ability to have a more balanced work and home life. Instead of walking to the breakroom for a snack and bumping into coworkers for a conversation, I can instead throw a load of laundry in the wash in the same amount of time.”

Liz Swaine, director of Shreveport Downtown Development Authority, says observations tell her that commercial occupancy in downtown Shreveport is roughly half of pre-COVID occupancy. It has a knock on effect she called the literal “Perfect Storm of ‘Bad.’” 

“It has created hardships for businesses like restaurants, coffee shops and retail that depend on office and employee foot traffic, restrictions on bars have all but shut down nightlife, fear of travel and COVID restrictions hurt hotels and casinos,” she said.

This shift is causing some national experts to question whether office space will become obsolete and unnecessary for companies to operate efficiently.

Swaine said while businesses have been able to continue to operate, she feels working from home is far from ideal. 

“Though it is true that the multiple interruptions during a typical office day might not occur at home, allowing more productivity, I feel it is far better in the long run to be in a communal work environment to discuss ideas, talk about issues, and network in real time,” Swaine opined. “People need to be around other people, and I think that some of the things that pushed people to at-home work in larger cities are just not issues in downtown Shreveport. You can be in your office, walk our streets, and walk through our businesses all while observing social distancing.”

She said that downtown Shreveport is meeting the needs of this new market of remote workers via access to amenities without density and crowds that make other cities susceptible to COVID outbreaks.

“When they decide they have had enough alone time, they can walk to Rhino Coffee for a dark roast, or to Robinson Film Center to see a movie, or to Bailey Gallery to see the latest art exhibit,” Swaine said.

She pointed out that during the pandemic, DDA has seen few business closures and more business openings. In fact, during the final six months of 2020, her organization was steadily in contact with a variety of investors and developers that have been interested in downtown buildings for a variety of uses.

“There is still great interest in downtown properties — there are some letters of intent and several others are under serious consideration for uses that range from everything to apartments to a boutique hotel,” Swaine said. “I would encourage anyone on the fence to get off it or the property that they have been considering might be gone.”

One of the knock on effects of this shift to remote work is the residential real estate market has picked up due to the work from home trend — Cheatham says many buyers are looking for that additional bedroom to turn into a home office. 

As of January 2021, due to interest rates being low, and the need for a home office, the inventory of 4-bedroom or larger homes is much lower than years past,” he revealed. “Homes that have an extra bedroom or bonus room are selling at a much faster rate. Some stay on the market less than 24 hours.”

Swaine said another effect is that several cities around the country are offering Remote Worker Grants — in the form of cash for a mortgage to free land — for new residents to move there and stay for a period of time. She said this can be a great marketing opportunity for Shreveport-Bossier.

“We, as a community, need to position ourselves as a great place to move to get away from those cities that are so crowded that residents feel unsafe,” she said.

Finally, Williams added that an unintended consequence of remote work is that she feels more connected with her colleagues via employer-created groups that facilitate connections between like-minded employees.

“Since we transitioned to working remotely, these groups have hosted many Zoom calls for after hour get-togethers, book clubs and social justice discussions.”

She concluded, “Obviously remote work doesn’t work for all industries, such as tourism and restaurants. I do think that it has been an amazing and wonderful thing to see the creativity of people and companies pulling together to serve their customers with all the challenges COVID has presented.”

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