Post-COVID commercial real estate trends
Joe Bealmear, a shareholder in the law firm Polsinelli, outlined seven trends to watch
ST. LOUIS experts agree that commercial real estate will be a completely different market after the pandemic. What will it look like?
Joe Bealmear, a shareholder in the law firm Polsinelli who advises on the acquisition, financing, development, leasing and sale of office space, outlined seven trends to be observed.
1. “Hoteling” of office space by a tenant. Some companies have announced plans to postpone the use of space by their employees, with employees taking turns spending days in the office. “It remains to be seen whether the agreements are temporary or permanent and how well employees who are used to controlling and decorating their own workspaces will feel about this agreement,” said Bealmear.
2. Room division by several tenants. Even before the pandemic, it was not uncommon for medical providers such as dentists and opticians to make arrangements to share rooms, with one medical provider using the office on certain days or hours and another provider using the same office on other hours or days. The agreement allows them to share expensive medical equipment and work from multiple offices in a metropolitan area to better reach their patients. “There are some questions about whether this concept will spread to non-medical office space after the pandemic. However, most commercial office rentals would ban this arrangement without the landlord’s prior consent,” Bealmear said.
3. Rethink open office design and furnishings. The pre-Covid trend was toward workplaces that enabled more social interaction and collaboration, with an emphasis on larger common areas and more amenities like coffee bars, ping pong tables, putting greens, and more. The common wisdom was that these types of amenities were necessary in order to attract, engage, and retain younger employees. Covid health concerns broke the trend. “Will the fear of closing expensive community areas convince companies not to install them? Or will the pent-up demand from people looking for community engagement spread to the world once we are fully in a post-covid world . ” Office space and trigger a new arms race for these conveniences? “Said Bealmear.
4. Impact on overall demand for office space and related retail. “There has been a lot of discussion about how companies are moving to a permanent work-from-home model for a substantial part of the workforce, and how that model could then affect both office buildings and retail users who rely on the presence of these office workers are. “he said.
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