11/09/2021 | by Sarah Borchersen-Keto

Labor market disruption and changing employee expectations are likely to continue to keep the workplace environment in a state of flux for some time to come, according to a panel of REIT CEOs speaking at Nareit’s REITworld: 2021 Annual Conference.

Marguerite Nader, president and CEO of Equity Lifestyle Properties, Inc. (NYSE: ELS), and incoming Nareit chair, moderated the panel. CEOs on the panel included: Matt Kelly, CEO of JBG SMITH (NYSE: JBGS); Marshall Loeb, president & CEO of EastGroup Properties (NYSE: EGP); Sumit Roy, president & CEO of Realty Income Corp. (NYSE: O); and Jeffrey Stoops, president & CEO of SBA Communications Corp. (Nasdaq: SBAC).

REIT CEOs noted that the pandemic had exacerbated labor market trends that were already in motion.

Kelly, for example, pointed out that companies across the supply chain were all experiencing labor shortages prior to the onset of COVID-19. The adoption of federal stimulus measures gave workers a financial cushion to consider other employment options, he said. As a result, “I think we’ll be living with some of the labor market chaos for at least the next six months, probably 12 months, as these things work their way through the system and go through a little bit of a reset.”

Stoops agreed, saying “people had a long time to think about how they want to live the rest of their life…that’s going to stay with us for a long time.” He added that a likely permanent outcome of the pandemic is a desire among staff, particularly new hires, to work remotely.

Roy also addressed labor issues, noting that “we’re all struggling with what is the environment of the future in terms of how people are going to be working.” He noted that these are hard questions that companies are asking internally as they adopt bespoke solutions to their individual circumstances.

For its part, Realty Income is contemplating a three day in the office schedule for employees, Roy said. Such a setup would, in the near term, address the disparity in terms of choices being made among employees about whether or not to be vaccinated, Roy explained. However, whether this is a long-term solution remains to be seen, he said.

Kelly, meanwhile, said he does not see a future for a five day office workweek—“I don’t think that ever happens.” He also noted that vaccine mandates come at a particularly challenging time in the labor market. “They are not helpful to maintaining your ranks,” he said, with tenants seeing a resulting 1-3% loss of staff.

Other CEO observations during the panel included:

  • Loeb said inflation pressures may persist as companies struggle to find workers. “I’m not as optimistic that it will be this transitory,” he said.
  • Kelly described debt markets as “on fire right now,” with the “tightest financing we’ve ever seen.”
  • ESG questions used to be the last asked by investors on a 30-40 minute call. Now, “in some cases it’s the leading question,” Roy said. “We are making progress. Obviously, this is something that is very dear to our hearts.”