How the pandemic is changing Philadelphia’s commercial real estate

Commercial real estate agents are scrambling to make office space more attractive after the pandemic has caused many companies to revise how and where we work.

What’s up: As hybrid work environments become the norm, some commercial real estate companies like CBRE believe that flexible office rentals will become increasingly popular.

• In the meantime, some brokers are focusing on attracting office buildings that generally offer more lenient contracts.

According to the numbers: Between mid-2020 and mid-2021, after nearly a decade of growth across the country, flex office space declined 9.2% but is slowly recovering at the national level.

Context: Flexspace refers to offices that are fully furnished and often have their own IT infrastructure. They usually charge based on the seat and not on the square meter.

• Businesses can enter into leases for as little as one month or up to three years, while traditional office space leases typically run for five years or more.
• To attract more customers, many Flex Office providers offer on-demand, pay-by-use memberships or subscription-based services.

Zoom in: The industries with high demand for office space in Philadelphia are the life sciences and life sciences as they continue to require more laboratory space.

• Coworking spaces for small startups in the life science sector are also becoming increasingly popular in the Philadelphia region.

What you say: Jason Kramer, senior vice president at Binswanger, told Axios that he has been pushing landlords to create more expansion, consolidation and sublet options for tenants.

• It’s common for customers to be reluctant to sign long leases as most are still thinking about the future of work, he said.

Joe Gibson, assistant director of research at CBRE, said that “it’s no secret that the office has been harder hit by all of the different commercial real estate sectors since the pandemic began”.

• But “in two or three years we will see a recovery and the worst will be behind us,” Gibson said.