The impact of the COVID-19 pandemic has definitely left its mark on the commercial real estate market. It has been one of the hardest hit industry sectors in the wake of the pandemic, as businesses were left to re-evaluate their real estate footprint against the backdrop of a changing workplace environment.
As a result, we have seen far fewer companies investing in new office space and relocations, and more focus placed on ensuring the safe exit and then return of employees back to the workplace.
Likewise, sales, leasing, and construction activity remained low through the end of 2020. This has continued to some degree, as the latest data reported by the National Association of Realtors (NAR) shows that the value of commercial real estate is still down by 6 percent compared to a year ago. Meanwhile, many businesses that experienced a reduction of in-office employees, opted to lease smaller spaces. This is according to NAR’s “April 2021 Commercial Real Estate Trends and Outlook.”
But the good news is that the market appears to be in recovery mode as we approach the midway point of 2021. And, although the market still has a way to go before it reaches the vitality it experienced prior to March of last year, there is growing optimism.
In working closely with our customers, we have seen several notable trends emerge, as businesses continue to shift their focus and follow the moving target of health and safety guidelines and best practices.
As it relates to Daryl Flood Workplace Services, we recognize that change is always constant, and so we continue to shift our focus based on the market trends and conditions that impact our customers. Thus, we continually align the services that we provide to best reflect what our customers need, when they need it. So, not only do we stay abreast of market trends, but we anticipate what those trends will mean for our customers, and how we can help.
Over the last year, we have seen far fewer companies engaged in office relocations. Obviously, this is the result of many companies implementing a work-from-home policy (in whole or in part), to best mitigate the health and safety risks to their employees.
So, we have seen a significant shift in focus among our customers, from the need to send employees home in March of 2020, to preparing the workplace environment for their safe return. Planning for their return created the immediate need to reconfigure and optimize existing workspace and facilities. This has been a critical area where our customers have been able to rely on us to consult with them and expertly manage and execute every aspect of the project.
Reconfiguring and Optimizing Existing Space
The focus on reconfiguring and optimizing existing space is a trend that continues to be a top priority for many of our customers. This is because there are still many businesses that have not brought their full employee population back into the workplace yet.
For those companies, we can work closely with them by providing furniture decommissioning and redesign services to create more space between employee cubicles or workstations, as well as in communal spaces such as conference rooms and break rooms. We can remove furniture and cubicles to redesign the look, feel and traffic flow of the workplace, so that employees feel more comfortable when they return.
In many cases, businesses have implemented strategies for bringing employees back in phases until they reach a point where 100 percent of the employees are back in the workplace. Other businesses, however, don’t plan on bringing everyone back to the office. They expect to continue with a hybrid workplace model, whereby some employees remain remote some of the time or even permanently.
This could further impact the commercial real estate market, as more companies take advantage of the ability to reduce their real estate costs. It could take a while though to see the true impact, because many companies are bound by lease agreements that commit them to the larger spaces for another year or more.
Many businesses that are reaching the end of their current lease term, are moving to smaller spaces, or consolidating multiple locations into one location.
Warehouse Relocations and Industrial Projects
Another trend that we have seen in the last year has been the uptick in warehouse relocations and industrial projects, with several companies expanding and growing into new spaces or in need of larger operations. We managed many of those types of large-scale projects, often involving moves into a warehouse spaces that were upwards of 1 million square feet in size.
Major projects such as that are very complex to plan, organize, and execute. For that reason, we always take a phased approach when it comes to optimizing our move management strategy, which minimizes any downtime and allows our customers to remain operational throughout the entire process.
Keeping an Eye on the Market
At Daryl Flood, we continue to keep our eye on the commercial real estate market, because we know that it directly impacts our customers and their unique needs in terms of workplace services. It also tells us when we need to pivot or expand the services we provide. That is why we constantly research and stay up to date on all areas of the market. It is something that our customers value and have come to depend on, as their trusted and reliable workplace services partner.
Do you have a question about the market or our workplace services? If so, please contact us anytime!