Another Trend Accelerated by COVID: Flexible Building Design

Even before COVID there was a trend to design more flexible buildings.

“Office is becoming like a hotel and retail is becoming like residential,” says JLL’s managing director of Property and Asset Management Randy Fink. “There is just the integration of the services across different product types of commercial real estate.”

Fink says commercial real estate is changing, even in the office sector. “It’s more and more of a consumer product,” Fink says. “That trend was there before COVID, but it has accelerated.”

Consumers are driving this evolution. “Decision makers are catering to that consumer mentality that is focused on wellness,” Fink says. “But there are a lot of other things included with that.”

One glaring example of this trend is the emergence of gyms in office buildings over the last decade. While new developers are producing buildings that encompass different services, the trend also extends to existing properties.

“I’m seeing existing owners looking at either retrofitting or forecasting things that are going to be different in the future,” Fink says. “It’s a way to prove that you have a healthy well space or common area in particular. Then also there is a built-in flexibility so that they can adjust to consumer demand, depending on how they evolve.”

Fink also sees technology playing an even greater role in the future with the trend of smart buildings and smart shopping centers accelerating. For instance, he thinks a technology where people can call an elevator and pick a floor from their smartphone is becoming more popular, especially with concerns about touching surfaces that have been amplified by COVID.

“Being able to engage with your building through your smartphone, whether it’s an apartment building or a shopping center or an office building, was a trend before COVID,” Fink says. “We’re seeing a lot of interest in that and people that were already on that bandwagon are able to adjust quicker than folks that are just trying to start out today.”

Fink also sees an increasing adoption of sustainable buildings.

“Where I see it now and what our marketing folks are seeing is that being able to differentiate your asset from a leasing and marketing perspective is the immediate advantage of sustainability,” Fink says. “There are also some ESG [environmental, social and governance] motives from equity investors that have been driving some of that stuff.”

In the past, international investors have been drawn to ESG investments. However, in 2020, their ability to tour acquisitions in the US was stymied due to travel restrictions.

Fink expects international investment to increase. “That trend certainly has been growing over the last five years,” Fink says. “I would assume it is accelerating and will accelerate, but I think that so much of the foreign investment in real estate in the US has just been so quirky [because of COVID].”