Some of the projected changes to traditional office space environment, flexibility in terms of remote work, varying floor plan layouts, etc. have arrived sooner than expected due the COVID-19 pandemic, GlobeSt.com reports. “Rethinking Real Estate” author and Real Innovation Academy owner Dror Poleg explored the topic on CRBE Group’s The Weekly Take podcast.
Poleg’s book included several CRE-related predictions, including employee flexibility in terms of where they work—at company headquarters, a satellite office that’s perhaps closer to the employee’s home or at their residence. Poleg noted that the traditional office is likely not going to disappear however. Companies are just going to become more flexible and tailor their office environments to their employees’ needs. That trend has been evolving for the last five years, but has been accelerated amid the pandemic.
For example, employees might check into their company’s headquarters every so often, but spend the bulk of their time working remotely. Meanwhile, some employees might need a traditional desk set up one day and a creative space the next.
“So, you know, I want to access a different space every day based on what I’m supposed to do that day,” Poleg said during the podcast. “So now I’m recording a podcast. I want to access to a space that is good for that tomorrow. I’m doing focused work. Give me access to that the next day. I have to impress the clients.”
CRE as a whole will need to become more flexible
The traditional office space itself isn’t going anywhere, but the standard long-term leases are quickly becoming less commonplace. If and when tenants return to physical office, they’ll likely be looking for the short-term lease agreements that flexible office space companies like WeWork and Convene offer. Much like with reliable connectivity, tenants are becoming less willing to compromise on their demands—and that now includes lease agreements. As tenants gain more leverage, CRE owners, landlords and lenders are going to be willing adapt if they want to keep their properties occupied.
“I think that traditional capital markets have much less power than they did before,” Poleg said. “Landlords kind of saying, ‘OK, I’m just gonna keep doing what I’m doing and the bankers have my back—I wouldn’t count on that because the money will flow very quickly to other people that know how to give customers what they actually want.”
Joe Dyton can be reached at firstname.lastname@example.org.