The transformational variants of the coronavirus pandemic continue to wreak havoc on the return-to-office plans of many of America’s largest employers.
Ford Motor Company (NYSE: F) announced this week that it was postponing from January to March 2022 its plans to launch its hybrid model – here we are not talking about vans, but workers coming two or three days a week – for about 30,000 workers for the second in the country -the largest automobile manufacturer.
This follows a few days after a similar announcement from Alphabet, which predicted January 10, 2022, the date of the complete reopening of Google offices which employ tens of thousands of people in several locations. Google’s announcement said the uncertainty caused by the omicron variant caused the company not to set a firm date to fully open its offices.
Google is not alone among employers, large and small, facing the same conundrum and taking the same action, and this uncertainty will continue to plague the office space market so hard hit by COVID-19 for two years now.
Here are three ways real estate investors are affected.
1. Office space itself faces uncertain future demand
Demand for office space slumped as downtowns and office parks emptied everywhere during the initial shutdown in the spring of 2020. One of the ways many homeowners – including trusts are real estate investment (REIT) – responded was to offer deferrals and rent reductions. Many tenants themselves have responded to their need for less space by subletting to others.
Then the vaccines arrived and the pandemic seemed to subside. This triggered predictions of a return to a new normal, which also includes hybrid return-to-work plans and social distancing, giving some optimism that a significant amount of office space would still be necessary.
But now that’s not happening at the expected level, and the obvious preference for millions of people to stay home, even if they have to change jobs or join the Great Resignation, obscures the future of a comeback. full on-demand office space before the pandemic. .
2. All of this affects the retail businesses and other services around these offices.
Central business districts are not just the preserve of white-collar offices. Restaurants, convenience stores, doctor’s offices and more cluster around these neighborhoods to serve the workers there. Vendors of parking lots, public transport, Uber and taxi drivers – there are so many other people involved and dependent on this occupation of office space, affecting both rent and tax collection. Collectively, this could have a lasting effect on infrastructure centered around people working in large numbers across all of this commercial real estate.
3. What Happens With Offices Can Support Housing Growth In The Suburbs And Beyond
Polls regularly record the great desire of workers to work from home, and they also vote with their feet. People from many industries and professions who can work remotely are contributing to the migration to smaller markets for lifestyle and affordability reasons. It seems there is little reason why this should not continue, especially with the pandemic continuing – and everything that could happen next.
No clear path to vaccinate our way in a rally of the office segment
After the COVID-19 vaccines arrived last year, people started returning to the office in significant numbers, and despite the hindsight, vaccinations are still a mandate in some markets, including New York City.
Just feeling safe with other people should encourage people who need space to return to their company offices or co-working spaces.
And, of course, each market has its own story to tell, but it remains to be seen whether there will be a widespread and lasting return to the burgeoning business districts of downtown and the suburbs in general.
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