ABQ Lenders Weigh in on what a Return to the Office in the age of Covid-19 will Look Like
By Ron Davis – Reporter, Albuquerque Business First
Mar 11, 2020, 6:59am EDT
Remember back to when those minimal nods of acknowledgment and small talk with strangers took place in the workplace elevator. In the age of Covid-19 infections, those interactions might occur in a line, while running a little bit behind and stuck behind 25 people because the building staff has to ensure the elevator car has been cleaned properly.
Just because employees can begin to go back to work in New Mexico’s office buildings, it doesn’t mean the risk from Covid-19 will be gone. Maintaining social distancing and keeping the workplace clean will be paramount. Never mind figuring out the logistics of something taken for granted, such as how many people can ride an elevator at once.
“It can take you a long time to get to work in the morning if everyone shows up at 8 o’clock,” said Joe Farr, president and qualifying broker for Duke City Commercial LLC. “How buildings are maintained, structured, built, how distancing is set up could be something that people look at a little harder.”
Albuquerque real estate leaders expect returning to the office will mean modifications to individual spaces and office buildings in order to keep everyone safe from infection. Even the need for office space is a question, as many companies have taken a hit to their bottom line and halted expansions. Others have found working remotely to be safer and more efficient.
Every individual company will make decisions on the need for more office space or the need to shed the overhead an office presents, said Jim Chynoweth, managing director for CBRE’s Albuquerque market. He envisions changes like temperature checks for those entering into an office. Businesses may also make offices less dense, giving everyone more space than they’ve been used to.
Chynoweth expects just about every company to make some modifications to its working space.
“I think you’ll see a lot more restrictions on access to individual offices as well as office buildings,” Chynoweth said. “All of this is going to result in a lot of changes to office layouts, configurations and safety concerns.”
Of course with offices closed for the last two months, some workers feel safer and more accustomed to working from home. Chynoweth said some business owners and managers — being cognizant of workers’ preferences and safety — may continue these remote work initiatives.
But business owners and managers also will have to weigh the benefits of working remotely with employee productivity, Farr said.
For those employees that do go back, they may find a new office configuration. Even before the Covid-19 pandemic hit, Jordan Shipley said there was a movement toward more open and collaborative office spaces. But the associate broker with Allen Sigmon Real Estate Group said the trend toward flex working environments will only continue. Companies have recognized technology can allow employees to work remotely. However business needs may still require employees to be at the office.
The majority of office prospects Shipley has worked with have put expansions on hold. Many have signed short-term extensions at their current spaces. He said that those delays are because of the uncertainty surrounding when they’re able to begin working in the office full time.
While the immediate uncertainty has slowed office expansions, over the long term Farr said the demand for office space could go either way, depending on the individual companies. He expects there to be a drop off in office use among big retailers, industrial companies and hotels. These kinds of businesses could to cease “back office” operations that handle administrative and accounting work.
For many of the same reasons, several office expansion deals that CBRE has been working on also are on hold, Chynoweth said. He thinks most existing tenants will stay put or extend their lease.
“My anticipation is companies that had been looking into a move are probably more apt to renew in place until the future picture becomes clearer,” Chynoweth said. “But we are still finding a lot of organizations that are moving forward with pre-Covid plans. … We’ve still got pretty decent activity.”
All three said despite logistical and financial challenges, landlords, tenants and lenders have communicated throughout, working through cash flow disruptions and missed rent and mortgage payments.
Shipley said related parties will also collaborate around pandemic language in leases, designed to protect all parties from future pandemics.
“It’s a top-down scenario where everybody has a responsibly to somebody, so I think it will be a collaborative effort between all groups to say ‘how are we going to protect ourselves again?'” he said. “I think it’s good to recognize that everybody succeeds based on everyone else succeeding. It’s not a one-sided thing where tenants only succeed when landlords and bankers fail and banks only succeed by creating outcomes that only work for them and not landlords.”
Originally reported on ABQ Biz First: https://www.bizjournals.com/albuquerque/news/2020/05/11/abq-leaders-weigh-in-on-what-a-return-to-the.html
Allen Sigmon Real Estate Group is a full-service commercial real estate company based in Albuquerque with an expertise in acquisitions, brokerage, development, and property management. As a local company, we pride ourselves in our knowledge of the New Mexico commercial market and the relationships we are able to foster compared to larger national firms. Our office works with every kind of commercial property; including office, industrial, retail, land, and multifamily. Our understanding of client needs and concerns not only comes from our experience as an office but also as owners and investors of commercial property ourselves. We have an excellent team in place that is eager to work on your behalf; our results speak for themselves.