Business

Office landlords don’t take return to work for granted

Written by Administrator


As more employers unveil their plans for workers to return to their offices, landlords are also getting ready to welcome back tenants. But even the nation’s most well-funded real estate moguls, whose tenants have largely paid rent throughout the pandemic, recognize that the traditional office has fundamentally changed and they’re competing with working from home as much as with rival landlords.

As a result, landlords are trying to combine pre-pandemic perks like wine happy hours with far more serious amenities that address workers’ continued fears of getting sick.

“The priority order is health and safety, confidence and transparency — how do we make individuals feel safe and secure at work?” said Emma Buckland, global president of property management with the commercial real estate services company CBRE, which manages 1.3 billion square feet of office space in the U.S.

It’s still early to know what will draw workers back since so few have returned to the office, especially given the uncertainty about when a large percentage of the employee population will be vaccinated.

Salesforce announced this week it will invite workers back into the office in three phases beginning with volunteer cohorts of 100 people who have been vaccinated. Amazon said it has only about 10 percent of its workforce in the office. But it plans for a full reopening in the fall. Facebook’s work-from-home policy will end in July, and the company plans to open its largest sites at 50 percent after Sept. 7.

On Wall Street, both Goldman Sachs and J.P. Morgan have asked interns to work at the office this summer out of concern young bankers would not get the same mentoring remotely as they would in person.

Between 15 and 35 percent of workers are back at the office, which suggests companies have little information on how their workers will fare once people are back at work in full force, said Steve Sakwa, a senior equity research analyst with Evercore ISI.

“Every company is trying to figure out the right time frame and, ultimately, what the right hybrid slash return to normalcy is going to look like,” Sakwa said. “It’s not a one-size-fits-all program for every company.”

That has left landlords scrambling to figure out how to attract tenants back to the office.

Ken Fisher, co-managing partner of the New York property development company Fisher Brothers, said the company’s 7 million square feet of office space had an 8 to 10 percent occupancy rate through the pandemic while people stayed home.

Across several buildings, Fisher Brothers installed UV lights and hydrogen peroxide gas to filter air conditioning systems at the beginning of the pandemic. The company also enabled Bluetooth technology in some of its buildings to let workers call an elevator remotely, and it applied microbial film to door handles and frames. At its 1345 6th Ave. office property in Manhattan, it created an amenity center and catering service that can be accessed through a smartphone app, which increases convenience and reduces contact with surfaces. It’s planning to roll out a similar program at its Park Avenue Plaza property.

But Fisher is also realistic about whether that will be enough.

“We’re constantly looking for ways to add amenities,” Fisher said. “But the question becomes ‘What will people be comfortable doing?'”

Changing needs

Some landlords are also thinking about whether they can redesign their offices to accommodate how people will try to work as the pandemic recedes.

New York City landlord Sage Realty predicted that people will work remotely up to two days a week, which it estimated will lead to a 30 percent decrease in occupancy and a 40 percent decrease in office space that it rents out, according to a client presentation from October.

Alec Fomin, director of tenant experience at Sage Realty, said the company assumes office buildings of the future will need less space for people to work and more areas for people to meet and focus. It plans to add reservable offices and smaller conference rooms for six people or less.

“There is more focus on how offices can foster collaboration,” Fomin said. “Everyone is thinking about that more than they were one or two years ago.”

Traditional perks

Silverstein Properties, whose buildings include the World Trade Center and tenants include Moody’s and Spotify, has focused largely on luring tenants back with perks, while also thinking about post-pandemic needs.

Its office buildings have been refashioned with new lounge, bar and restaurant spaces as well as yoga studios, conference rooms and outdoor patios. Office workers can use the company’s new software to order food directly to their desks, book a yoga or meditation class or schedule a Covid-19 test online. Silverstein has added new breakout rooms, conference rooms and phone booths where people can do Zoom calls. It has also designated certain offices as temporary workspaces for a day, week or month.

“A lot of people who have transitioned back are thinking about ‘How can I be on a Zoom call and not annoy the person next to me?’” said Dara McQuillan, a spokesperson for Silverstein Properties.

Some building owners like the investment management company Nuveen are adding golf simulation activities, private rooms for nursing mothers and community events such as wine in the park, said Nadir Settles, managing director of New York property investments with Nuveen. They’re also encouraging workers to use the building smartphone app that is enabled to call an elevator using Bluetooth technology or have food or coffee delivered to them anywhere they are in the building.

“It’s all being done for the purpose to position these properties to be an alternative to what we’ve done over last year with being comfortable at home,” said Kevin Smith, executive managing director of asset services at Cushman & Wakefield who advises Nuveen on its properties.

Other landlords are hoping that offering the most advanced technologies may draw tenants back to work.

JLL, a global commercial real estate services company, recently rolled out a new artificial-intelligence-powered tool that helps workers request a workspace as more offices roll out unassigned desks under a hybrid work model. The company has also talked with clients about ways to schedule in-person meetings at the office, as more people work from home, and AI tools that monitor high-traffic areas that may need additional cleaning, said Sanjay Rishi, CEO of corporate solutions with JLL.

“What our clients are asking for and tech companies are investing in is ‘How do I make the experience of collaborating physically and virtually as similar as possible?'” Rishi said.

Yet landlords realize it may be a long time before tenants return to offices like they did before the pandemic.

As tenants discuss time frames for a return to the office with the company, Fisher said he realizes many workers will remain at home partly out of fear of the virus. The company is anticipating what Fisher called a “psychological hangover” from the pandemic as people adjust to post-pandemic life.

“The question becomes ‘How long does this last?’” he said. “And how much is it going to change how we interact? We don’t know.”


Source link

About the author

Administrator