The Dallas commercial real estate community is optimistic that at least 85% of employees will be working from their office by January 2022. Approximately 5 in 10 workers are already back in some capacity, according to Kastle Systems keyless entry system tracker. However, the Dallas CRE community recognizes that the post-COVID-19 landscape will look much different, Bisnow reports.
“I don’t think we’ll ever get back, quite frankly, to what we saw pre-pandemic,” HqO Senior Account Executive Clay Curlee said at Bisnow’s recent The Evolution of DFW Office event. Curlee added that the COVID-19 pandemic has already put some trends in motion, such as how tenants use space.
“I don’t think that’s necessarily a bad thing,” Curlee said. “When you look at best-in-class landlords, they will prevail, they will have fuller space. (But) I think that they’ll find their tenants are doing more with less. Just being a realist, I don’t think you’re ever going to see quite the same usage that you saw prior.”
Meanwhile, ARCO/Murray Vice President Lauren Ladowski said she’s seen companies handle their return-to-work protocols in a variety of ways. For example, she noted a large financial technology (fintech) client in Westlake was operating, “as if COVID never happened.” The company has filled its more than 50,000 square foot facility with employees who’ve packed into 150 square foot cubicles. Alternatively, an ARCO/Murray client in Addison downsized to a new 11,000 square foot facility in Richardson and has implemented a flexible office hoteling environment with collaborative space.
“I think what we’re going to see moving forward is everyone really optimizing their square footage, and that might mean something different for every culture, company and firm, depending on what their employees need and what they need to retain those employees,” Ladowski said. “But focusing on amenity spaces, collaboration areas and making sure that you don’t have wasted space within your office footprints is a trend that’s going to continue driving usage (going) forward.”
The Evolution of DFW Office panelists agreed that small companies are currently the return to the office trendsetters because they’re free of national or global policies, Bisnow reports. For example, Hillwood Urban Senior Vice President Walt Zartman noted that larger companies that used the “hotel” method during the pandemic are now struggling to rewrite their real estate models.
“They’re in a mess right now, because they don’t know how to figure it out,” he said.
“We’ve got a couple of tenants, big corporate users, where it’s a ghost town at these wonderful new facilities,” KDC Senior Vice President Bill Guthrey added. “While there might be a desire to get everybody back in, a lot of these big corporations are looking at their entire global landscape and can’t do something unique in certain markets. They have to consider the concerns and the legal aspects of pushing people back to work and, ‘how do we get it done?’”
Optimism remains up for Dallas CRE market
Dallas’ CRE market’s fate might feel ambiguous right now, but the panelists expressed confidence that it can adjust by enticing a disproportionate share of office employment growth nationally. The group pointed to big upcoming deals like Goldman Sachs seeking up to 1 million square feet in the area. Peloton also announced at the end of last year that it would quadruple its footprint at Plano’s Legacy Central. WorkSuite’s President and CEO Flip Howard said his coworking business has rebounded since December and is having an all-time seven-month stretch. Howard said he expects coworking space, which currently comprises 2% of all office to eventually make up close to 30% due to flexibility.
“And it’s not all enterprise users, it’s everybody,” he said. “The other thing that we’re seeing that is surprising is even from the landlord side, when we go to buildings looking for more space, it used to be, ‘Yeah, we’d like a floor of coworking, but let’s see if we can get this law firm in here first. Now it’s the exact opposite of that. It’s ‘If we don’t have coworking in our building, we need a floor of that.’ We’re even hearing about tech tenants requiring there to be a coworking floor in a building before they’ll even consider taking another floor of that building.”
The panelists also acknowledged that when a footprint is readjusted, there will be another business to fill the gap.
“There is a reduction in footprint, (but) Dallas will be able to absorb that better than any other place in the country,” Transwestern Senior Vice President Billy Gannon said during the event. “When companies look around, they’re like, ‘Hey, we want to hire, we want to grow our company.’ But if you’ve got a national footprint, you’re going to do it where the state’s open, it’s business-friendly, there’s low taxes, low regulations and good, qualified hidden labor versus having to do that [in] Seattle, San Francisco or New York. It makes all the sense in the world, and if we reduce our footprint by 5% here, we’ll exceed it by bringing in an extra 10%, 15% [there].”
Joe Dyton can be reached at email@example.com.