In our discussions with commercial office operators, we continue to see an increased sense of optimism for the market. As the broader COVID-19 worries wane and vaccination rates continue climbing, the commercial office space is expecting a comeback sometime soon. When will that be?
Well, no one exactly knows! After many predictions of a roaring comeback were unmet, the broader commercial office market is happy to move forward without predictions of when ‘normal’ will return.
It’s worth exploring further why this heightened level of uncertainty persists within the commercial office space. Looking at other end markets that were also heavily impacted by COVID-19, we are seeing a sustained rebound and movement towards normalcy. People are coming back in droves to restaurants, bars, movie theaters, airports, concerts, and sporting events.
Compared to commercial offices, these venues don’t necessarily represent a safer environment against COVID-19. It can legitimately be argued that many of these venues are less safe given the underlying activities and size constraints involved. Regardless, they are attracting and retaining people at a higher rate.
Why?
We believe these venues provide a key utility to people that commercial offices are currently missing, EXCITEMENT! After an extended stretch of being stuck inside homes, people are enthusiastically partaking in social activities that bring them in constant contact with strangers. When it comes to offices, though, people have shown hesitation in returning. They don’t see the intrinsic excitement in office life, especially when compared to alternative options such as working from home or an AirBnB getaway.
Taking a step further, it’s important to understand who is the most hesitant in returning to the office. Most managers would love to have their teams back in a centralized location. Underlying employees, though, are the ones who are vocally hesitant in such a return. Many don’t see the value of going back to the office and giving up the comfort and efficiency of working from home or a local coffee shop. Who could blame them? Especially, since most office buildings provide a stale and unenergetic offering.
So, what does this mean for the commercial office space? We believe to reignite a return to the office, operators will have to create a level of excitement within their buildings. They will need to focus more than ever on the tenant experience. These improvements will have the highest positive impact for a tenant’s underlying employee base, who have the highest resistance in returning to the office.
Commercial office operators will have to realize that pre-pandemic offices will not attract post-pandemic tenants. Focus aimed solely on improved safety measures will not be enough to spur people out of homes or coffee shops and into office desks. Potential tenants will need a pull to get them back into the office.
This may come in the form of new or improved amenities, quick access to trendy restaurants and bars, and outdoor areas to meet with colleagues or decompress. The competition for tenants is no longer just a battle between one commercial office building and another. It’s being played amongst anything with chairs, tables and strong WiFi access!
Commercial office operators have to give potential tenants reasons to point to why they are returning to the office. Improved health and safety measures are a baseline to start from, but there needs to be more to help shape the office building as a DESTINATION for people. We strongly believe that operators who understand this changing dynamic will not only rebound sooner but will also create a dominant position in the market moving forward.