03/04/2021
A little bit of industry insight related to office buildings, and the ever changing target and mindset of companies getting their employees to return to the office.
Needless to say, its been a difficult year for us office brokers, as we need activity and transactions to earn a living. Leases equal rental income. My income is earned as a percentage of the aggregate total gross rental income of that lease. I represent 7 office buildings in Broward and Palm Beach Counties, and even 12 months later, our parking lots are at 20% capacity on an average work day. Most still work from home. Very few companies have made long term decisions in such an air of uncertainty. Companies who have had lease expirations in the midst of covid did one of a few things: they renewed short term; some moved out; some renewed but gave back portions of their space no longer necessary; while a small handful of consistently successful companies capitalized on the uncertainty of the world, and locked in long term with aggressive deals, and immediately reducing current rent obligations. In my 22 year career, this is easily the worst economic disaster to hit our industry, worse than 9/11, worse than the recession, worse than any hurricane. At least with those events, there was an end and a clear new beginning. Not with COVID-19.
Having said all of this, there seems to be a greater amount of foot traffic, if nothing else, over the last month or so. With that, I am hopeful that by the end of summer, we will see a definitive shift, and here's why....
60 days into lockdown, the mindset was that 30-40% of the workforce will never return to their offices after finding that employee production didn't miss a beat, and people seemed very happy at home. Fast forward 9-10 months, I am finding that as great as it sounded at the time, companies I am speaking with are seeing a decrease in productivity, obviously triggered by human nature and employees literally getting to be their own boss from home. Bad habits form easy. Most CEO's, who thanks to PPP loans, never stopped paying rent early on, want their employees back together and productive. They are also now covering their own rent again, and unless they will qualify for another round of PPP, they pay rent for an empty office. Many, it seems, also miss the social interaction with co-workers, who for many over time, become more like family. I am hopeful that combining human nature and a shift in mindset with a continuing mass rollout of the vaccine, people will soon swap out the sweats for work clothes, and come back to the office. If not, I need to start producing a lot more eggs....
The COVID office disruption is just getting started. Talent experts talk about the transition period coming as workers return to their offices post-vaccine.
