As the US climbs out of the COVID-19 pandemic, speculation abounds about demand drivers for commercial space, particularly in an office sector historically viewed as a safe bet for investors. But whether or not employees return to the office is not the question. "The question is not whether people are going to return to the office," says Barry Blanton, CPM, founding principal and chief problem solver at Seattle-based property management firm Blanton Turner, AMO, and 2022 IREM (Institute of Real Estate Management) president. "The better question is, how will offices be used, this year and beyond?"
Before the pandemic, density was the name of the game for the office asset class, but that's not necessarily the future. Instead, the social and cultural value of physical space will take on new significance in 2022 – particularly amid the increasing race for talent.
"There will be a need for a new approach, but there's enough pie for everybody," Blanton says. "We'll see more of a focus on a physical, amenity-rich environment."
Hybrid work schedules and virtual work are here to stay, but physical spaces will continue to play a critical role in corporate culture. For most companies, Blanton predicts, that will involve workers coming into the office two or three days a week. Offices will function as gathering spaces for team collaboration, gathering, and socializing – all critical value adds for corporate culture.
"Virtual and hybrid work is not a passing trend," he says. "The pandemic ushered in a fundamental shift in how we work, and we've shown that we can produce virtually and remotely. But the ability to produce is not the only value derived from the work experience: people need culture and socialization, which requires personal interaction."
The evolution of the office sector will also have ripple effects for retail and multifamily operators and managers, especially in urban environments subject to the most restrictive COVID-19 policies. Blanton predicts people will indeed come back to live in the urban environment, but amenities (internal and external to the property) and remote work space will be a bigger consideration than ever before when making decisions about where to rent.
Adjustments will likely be made across all commercial real estate asset classes, requiring agility and adaptability that will become "normal operating procedure." In addition, he thinks 2022 will usher in an even more widespread embrace of technological advancements designed to help real estate owners, occupiers, and managers serve clients better and more effectively.
"People are often uncomfortable with change, but really they're uncomfortable with feeling out of control while change is happening," Blanton says. "In the commercial real estate world, we have learned that we can retain and master that agility and get in front of some of those issues. The last two years have been so challenging on so many levels for so many people, but with big challenges come great opportunities. I'm optimistic that as an industry, we'll continue to rise to meet them."
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
