By Cody Payne, Senior Vice President | Dallas-Fort Worth
Capital Markets Group, Colliers International
In the commercial real estate industry, we’ve been asked this a lot: How will COVID-19 affect office spaces and leasing moving forward?
As occupiers start their transition back to office space, companies are starting to look after their staff’s health first. COVID-19 has created a long-lasting impact on what precautions are going to be implemented moving forward. You will notice many have created a new six-foot office concept and with so many different designs in mind, time will tell as companies evaluate what is necessary from a cost perspective moving forward.
You enter your office building and are greeted with signs to remind you to continue practicing social distancing, while elevator rides are limited to a certain number of occupants. There is the idea of having self-cleaning elevator buttons moving forward, and as building standards go up, so do the costs of building operations.
Your newer class A and B office buildings are going to implement touchless entries, where you will have Bluetooth that will get you to your floor, and having that amenity to create peace of mind for your tenants is going to continue to drive new office construction here in Dallas-Fort Worth.
With that in mind your newer office space is going to be as efficient as possible with what was once a breakout room or conference room now being converted to more permanent office space as Zoom becomes the new normal for meetings and collaboration.
Although the office space average footprint will be shrinking, it will not be the end office space since there will still be some to balance decreasing common area space with the new six-foot office model.
The coworking office is going to come back stronger than ever. Although they are struggling now, they have the infrastructure built in to house virtual meetings, virtual office, and mail service. Larger companies are now going to look to the coworking model to develop flexibility to be nimble and continue to adapt to the changing market.
With the new normal starting to become a reality, landlords will have to account for increased costs and preventative measures to keep occupiers safe. As the occupiers look to return to their office space, a rotating schedule between teams is not going to be out of the picture.
The rotating schedule will have a potential A, B, and C schedule as we help to flatten the curve moving forward. The health and safety of everyone is imperative as we all return to back to our office space. The D-FW market demand for office space will reposition and building safety and amenities will be a huge part of building occupancy moving forward.
Another question we’re fielding: How will COVID-19 affect retail space moving forward?
We are starting to see retail slowly come back and shape how entertainment, gyms, and personal services are going to be handled. The retail space has undoubtably been hit the hardest out of all asset classes. Those who have stayed open during our current situation have had to become very creative in driving traffic while keeping all parties safe.
With landlords working with tenants to help drive traffic and allowing a marketing budget and curbside pickup being encouraged, you will see new relationships develop between your landlords and tenants.
The new normal is also starting to settle in with those who have chosen to start opening their business to dine-in or accepting walk-ins. Gyms have been working on separating their members from each other with designs of a modern glass divider between equipment. Your temperature being taken upon arrival at all walk-in based retail with your name, e-mail, and the best number to contact you has also started to take place to track a potential second break out.
Although some retailers will not be able to come back from this, there are some that will adapt to appointments only, and limiting their service moving forward.
As if retail was not already evolving, their spaces are most likely going to be repositioned for a much lower capacity moving forward. Our retailers will have to adjust to increased curbside and drive-thru services. Exceptional customer service, visibly clean environments will be a sure way to lure customers back and create loyalty.
With COVID-19 changing the landscape of retail faster than ever before, retail will have to do what it has always done. Retail will continue to evolve with the consumers and what they are looking for.
For example, experienced-based retail is a huge hit, and will continue to be for the future to come. The only differences are the safety measures that will be put into place. Grocery shopping will have to account for an increase in curbside pick-up and wider aisles for customers moving forward. Location-based retail will always be necessary, and even their cap rates will hold strong as we are seeing increased demand for single-tenant buildings in strong areas.