Working from home has become standard for many office workers during the COVID-19 pandemic and partial remote work is likely to remain a common practice even after the crisis, according to panelists in an October 22 webinar on the future of the office market hosted by Nareit and Bloomberg Intelligence.
The webinar, “Office Market Outlook: Views of a Post-COVID Future,” featured panelists Scott Crowe, chief investment strategist at CenterSquare Investment Management; Geoff Dybas, executive managing director and senior portfolio manager at Duff & Phelps Investment Management; Peter Miscovich, managing director, strategy and innovation at JLL; and Peter Smith, director of global real estate at Bloomberg LP.
“New behavior norms are going to reshape office work,” Miscovich said. “The most common model going forward will be a hybrid that mixes office, home and “anywhere” work.”
Dybas noted that the trend of densification that characterized office design over the last five decades likely end. With fewer employees using the space, traditional office design models will be passed over in favor of designs prioritizing employee health and safety.
Panelists discussed that leasing activity for office space in central business districts in gateway cities has fallen off dramatically, giving tenants the edge in negotiating new leases, reducing average rents and, ultimately, lowering office building values.
“To the extent that the REIT market foreshadows the private market, it’s saying we’re going to see a 20% reduction in office property values in major cities over the next 36 months,” Crowe said.
However, panelists agreed that while telework will most likely become a permanent part of our work culture, the need for a centralized office space remains. Space for in-person meetings, collaboration, and employee onboarding will still be needed when the pandemic is over.
A replay of the webinar can be seen here.