Guest blog by: Zain Jaffer
An exogenous shock to the market, COVID-19 is a magnitudinous force shaping new business norms for decades to come. The novel virus has turned health and safety into a corporate affair, a public conversation, and a shared responsibility. Q1 of 2020 forced virtually every employer and operation to pivot, and those that have found success have done so with the help and support of their teams.
Much of that help and support has come from people’s home offices. In April, Marcus & Millichap released a report estimating 43% of American employees were working remotely, an exponential increase from a pre-COVID 3.5%. Many teams have found real solutions in at-home working, and some industry leaders have announced their plans to reduce their corporate real estate going forward.
Advanced collaboration technologies and affordable home software have made remote working more feasible than ever, but it’s too soon to understand the downstream effects of a decentralized team. Monday meetings on the back deck may be going smoothly, but what does a full four quarters look like without a space to collaborate, mentor, recruit, or onboard? It’s still too soon to tell.
As a resume to business activity lingers somewhere on the horizon, employers are confronted with complex decisions around how to reintroduce their teams to the office, and how to ensure a safe and sustainable tenancy. Now that the issues of health and safety are collaborative items on the Monday meeting agenda, teams have new considerations, expectations, and priorities. Employers’ decisions will be driven by the extent to which they can provide their teams with tangible solutions.
The New Bare Minimum
Health is driving market appeal. People are reconsidering every aspect of their safety, including that of the spaces they frequent. Tenants are specifically seeking solutions in air quality and filtration, smart temperature control, water source and safety, HVAC capabilities, and pathogen eradication.
Newer buildings are proving more desirable, as many come equipped with innovations regarding the above, or have the capacity to seamlessly integrate new technology. For example, new temperature control technology is aiming to report on the quality of the air, clean it if necessary, and be able to filter any air coming in from the outside.
In addition to infrastructure solutions, tenants are looking for visible signs of the building’s commitment to health and safety. Automated doors, touch-less faucets, wide hallways and a daytime cleaning staff will no doubt be non-negotiable on a tenants list. While the initial cost of these adaptations will be the burden of building owners, investments made will be unwaveringly rewarded in the post-coronavirus market.
No Planet Left Behind
Signs of environmental reprieve have been unmistakable amidst our collective reduction in activity. Clear skies, less smog, more wildlife and starry nights; these temporary rewards are serving as major incentives to consider our environmental footprint as we reconsider and re-establish our new normal.
Tenants are seeking solutions, but they’re no longer willing to accept answers that come at cost to the environment. This increased awareness has greatly accelerated the market shift toward green building, and sustainable investments are already seeing massive returns.
In recent years, green innovations such as LED lighting, solar power, high performance windows and wall insulation have come to the market, and their demand will continue to rise. Eco-friendly water sources and geothermal walls, next in queue for sustainable solutions, have increased in their appeal and in their urgency.
Tenants have started asking for Global Real Estate Sustainability Benchmark (GRESB) reports, and inquiring about WELL Building Standards to fully understand the safety and sustainability of a building as they consider a return to office. Sustainability needs to be tangible and evident — easily conveyed and easily understood by employers and their teams — in order to justify a post-COVID tenancy. Anything less will be largely obsolete.
People as Non-Renewable Resources
The COVID-19 pandemic has revealed to many of us our interdependence; how greatly our actions effect our neighbors, and how little we’re really able to achieve on our own. The approach to the virus has been cooperative in nature, and the psychological effects of such impactful collaboration will extend to other areas of our lives.
Standing united in the face of crisis, we’re more aware than ever of the people around us and the human end of sustainability. After weeks of working from home, many teams have seen the benefits of more sleep, less stress-filled commuting, and more outdoor breaks through the work day. Employers are motivated to prioritize the needs of their employees and invest in a space that replicates these new necessities.
One abrupt change to be seen across the market will be the reversal of the densification trend. In past years, the office space per employee has steadily decreased from 250 square feet to less than 150 square feet. With increased awareness of our space and our distance, it will be a tenant’s first priority to ensure adequate space is available to each employee, even if it means buying more space for smaller teams.
Furthermore, buildings with designated meditation rooms, natural sunlight, and integrated access to outdoor spaces will be the first choice for team-conscious tenants. And after navigating one of the most challenging markets in recent history, any employer that remains in business will no doubt be a team-conscious tenant.
The commercial real estate market will be shaped by the above considerations — an emphasis on health, an awareness of the environment, and an increased focus on team-first accommodations. These adjusted expectations are small silver linings, pushing us toward a more sustainable, more physically and mentally healthful way of business. The collective pause has offered us the opportunity to correct the corporate practices that were taxing our environmental as well as our mental health. Amid such record disruption and despair, we may have been gifted one last second chance.
The commercial real estate market will be shaped by the above considerations — an emphasis on health, an awareness of the environment, and an increased focus on team-first accommodations. These adjusted expectations are small silver linings, pushing us toward a more sustainable, more physically and mentally healthful way of business. The collective pause has offered us the opportunity to correct the corporate practices that were taxing our environmental as well as our mental health. Amid such record disruption and despair, we may have been gifted one last second chance.
About Zain Jaffer
Zain Jaffer is the Founder and CEO of Zain Ventures.