WILL THERE BE A GLUT OF EMPTY OFFICE SPACE?

[MiamiLooker]

With so many office employees now working from home, will that become the norm when things return to "normal"? With rent being a major expense for many companies, if they find their employees are just as productive working from home, why do they need to maintain the same amount of office space they had two months ago?

[Rudynate]

But selected people have been working from home for decades. There are some tech companies that allowed large portions of their work force to work from home and reversed that policy because they found employees who came into the office for work were more productive.

[cany10011]

Some people need the structure of a work office. I have friends that need to leave the house for work to escape their needy husbands or wives. I prefer to work at home where I find myself more productive, have less wear on my car, and closer to my pets. Plus, no dry cleaning bills! I've been wearing sweats for the past several weeks.

[+ bigjoey]

I think this will be the case. One friend who owns a high tech computer company has told me as much.

 

I think that it will impact all areas of real estate. For example, as more people get use to shopping on line, expect retail stores to keep shrinking in number and size. Big shopping centers were struggling before the pandemic and this will push many over the edge.

 

I think this will affect college real estate as well both in classrooms and housing as more courses will move online. Why settle for a lecture from an average college professor when you can stream a great University of Pennsylvania professor.?. Why have a big campus and live away from home when it can all be done over the internet? (This week I participated in two interactive classes on ZOOM with 20 people in one class and about 30 in the other. I also “attended” a live lecture in NYC with about 800 people). Instead of spending months on campus, students may come for a few weeks at a time in person and spend the rest of the time online.

 

Housing patterns may change as well. If jobs are not tied to a physical location, people may chose less dense housing than big city high rises.

 

As telemedicine develops, some physical hospital functions may shrink just as outpatient surgery reduced the need for hospital beds.

 

We are still in the early stages of what can be a huge change in real estate.

[EZEtoGRU]

I think this will be the case. One friend who owns a high tech computer company has told me as much.

 

I think that it will impact all areas of real estate. For example, as more people get use to shopping on line, expect retail stores to keep shrinking in number and size. Big shopping centers were struggling before the pandemic and this will push many over the edge.

 

We are still in the early stages of what can be a huge change in real estate.

I fully agree. There will be a huge glut of office space and real estate in general. The remaining weak shopping malls will not re-open once things noticeably improve. Perhaps as things open up again in the fall or in 2021, we'll likely have only half of the number of shopping malls compared to what we had before COVID. Some major retailers will go under completely. Candidates would be: Sears/KMart, JCPenney, Macy's. There are suggestions that 20% or more of restaurants may not re-open once we are on the other side of this. There will be many more empty store fronts. Challenging times ahead. The aftermath will be frightening.

[+ Charlie]

As an independent consultant for a national company, I used to drive to an office in New Jersey to work. Then in 2002 they decided that most of the non-management employees could work at home, because it would reduce the company's overhead expenses, not only for maintenance of office space, but also because the employees would be supplying their own computers (and power and Internet connections!). Since they used people from all over the country, it also meant that they no longer needed satellite offices full of computers in Chicago, Atlanta, etc., and they could hire people who couldn't get to those satellite offices. Anyone in the country who had the proper equipment and an Internet connection at home could be employed after appropriate training at the main office. It also meant that I could move from PA to CA without giving up my job. After four years of commuting 25 miles on an Interstate to an office, I was happy to continue working from home for the next sixteen years, even though I did miss the cameraderie of working in an office.

[+ DERRIK]

Outfits like WEWORK and other co-op work spaces will be clobbered. Their tenants are start ups or gig work - without recourses to make it for months (or quickly figure out they can work from home)

[Rudynate]

As an independent consultant for a national company, I used to drive to an office in New Jersey to work. Then in 2002 they decided that most of the non-management employees could work at home, because it would reduce the company's overhead expenses, not only for maintenance of office space, but also because the employees would be supplying their own computers (and power and Internet connections!). Since they used people from all over the country, it also meant that they no longer needed satellite offices full of computers in Chicago, Atlanta, etc., and they could hire people who couldn't get to those satellite offices. Anyone in the country who had the proper equipment and an Internet connection at home could be employed after appropriate training at the main office. It also meant that I could move from PA to CA without giving up my job. After four years of commuting 25 miles on an Interstate to an office, I was happy to continue working from home for the next sixteen years, even though I did miss the cameraderie of working in an office.

 

 

I've worked from home for more than 20 years.

[+ sync]

The reduction in the number of shopping malls could prove to be an interesting full-circle. If the smaller mall shops move into or return to the main streets of towns and villages, it would be a welcome boost for local commerce. Of course, the stiff competition of online shopping is the wild-card.

[+ bigjoey]

The reduction in the number of shopping malls could prove to be an interesting full-circle. If the smaller mall shops move into or return to the main streets of towns and villages, it would be a welcome boost for local commerce. Of course, the stiff competition of online shopping is the wild-card.

 

Full circle is interesting in that the first huge enclosed malls were built because of weather.

 

Here in Kansas City, a man I knew had an uncle in Phoenix. On a Winter visit to him in the early 1960’s, he saw am enclosed mall there so people could have the “Main Street” experience during their brutality hot Summers. The man owned a big piece of land at 95th and Metcalf in Overland Park, KS and in about 1966 built our city’s first enclosed mall so people here could have the “Main Street” experience in our brutality cold Winters and humid Summers. The enclosed mall was a novelty at the time but a huge hit with the public.

 

Up to that point, the malls or shopping districts were open air. Some like the Prairie Village Mall still exist in its 1950’s open air form and the Ward Parkway Mall which originally was open air still exists in modified enclosed form.

 

Fun fact: the Ward Parkway Mall was where the multiplex movie theater was born.?. Stanley Durwood who founded the AMC movie chain was a local man (the chain is still headquartered here). Durwood invented the arm rest drink holder as well.?

[+ Charlie]

I'm not sure that residential colleges and universities will go the remote learning route. How do kids have drunken parties and sex with new people if their classmates are in their bedrooms at their parents' home? How can you have athletic teams without a campus? How can schools like USC and Alabama make money without filling stadiums and having live football games for TV contracts? How do students take science courses without sophisticated technical equipment? I think that college life will return to its familiar forms pretty quickly.

 

On the other hand, will we see office buildings and retail malls converted to housing? Why not? It's been happening for years to churches.

[+ WilliamM]

I'm not sure that residential colleges and universities will go the remote learning route. How do kids have drunken parties and sex with new people if their classmates are in their bedrooms at their parents' home? How can you have athletic teams without a campus? How can schools like USC and Alabama make money without filling stadiums and having live football games for TV contracts? How do students take science courses without sophisticated technical equipment? I think that college life will return to its familiar forms pretty quickly.

 

On the other hand, will we see office buildings and retail malls converted to housing? Why not? It's been happening for years to churches.

 

As important, how do students make friends and get to know teachers if interaction is only on line. How would graduate school recommrndations work if students never even meet teachers?

[+ Charlie]

As important, how do students make friends and get to know teachers if interaction is only on line. How would graduate school recommrndations work if students never even meet teachers?

Yes, the list of ways in which online education would change the entire higher education experience is long and depressing.

[+ RJD]

With so many office employees now working from home, will that become the norm when things return to "normal"? With rent being a major expense for many companies, if they find their employees are just as productive working from home, why do they need to maintain the same amount of office space they had two months ago?

 

Absolutely. Companies, mine included, are already in cost-cutting mode due to this pandemic. When they see the potential savings of greatly reducing, if not eliminating lease/rent expenses, they’re going to encourage the shift.