Posted May 25, 2021, 8:15 PM
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Join Date: Jun 2010
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Yes, this is a Big Deal(or is it?) More companies are embracing work from home. Downtown spending and CRE could suffer
May 25, 2021 By Andy Medici – Senior Reporter Business Journal
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More companies are embracing work-from-home options for the long term, and the trend threatens to limit spending in downtowns and urban areas, particularly in the nation's largest cities.
The new analysis of the impact of long-term remote work after the pandemic and its potential impact on cities comes from the University of Chicago’s Becker Friedman Institute for Economics, which found the post-pandemic work-from-home shift will lower spending on meals, entertainment, personal services and shopping, cutting spending in major cities by 5% to 10% of overall pre-pandemic spending.
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What's the Big Deal?
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It’s a big deal, according to Steven Davis, an economist and a professor at the University of Chicago who is one of the paper's authors. The trend could have multimillion-dollar implications for commercial real estate, labor market trends, city government budgets and the culinary sector, among others.
“Commercial property values will probably decline for office buildings but even more so for retail space. That means lower property tax revenues and lower sales tax revenues."
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Dangling Carrots And Wielding Sticks: Employers Aim To Accelerate 'Slow Drip' Return To Office
May 23, 2021 Jarred Schenke, Bisnow Atlanta
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At Crocker Partners' 11M SF of offices across the Southeast, occupancy has stubbornly hovered around 25% over the past six months.
But as vaccination rates have risen and restrictions have lifted, its offices are more like 35% filled this month, Managing Partner Angelo Bianco said, a disappointingly low number for this point in the year.
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What's the diagnosis?
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“Right now, it's a slow drip,” said Gensler Senior Associate Erin Greer, a co-director of the design firm's workplace studio. “There's that push and pull between traditionalists, if you will, who think you can put the genie back in the bottle.”
As of the middle of May, occupancy at office buildings in the nation's 10 largest metro areas was just below 28%, according to Kastle Systems, which operates entry control systems in commercial buildings.
Office occupancy in Austin, Houston and Dallas was over 40%, while the Northeast and California were still hovering in the teens, but the overall average has crawled up from the low 20% range since January, Kastle General Manager Adam Joseph said.
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What about nicer, newer office buildings?
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“The nicer the building it is, the less traffic that is going into those buildings,” Joseph said. “Our experience has been, at least in most markets, despite progress and better education about Covid, it's been slower.”
Prior to the pandemic, Kastle door swipes averaged between 50% and 70% of employees daily, which is considered full occupancy...
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What do you expect at this point?
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Going forward, the peak occupancy could top out at around 50% as companies adopt a permanent flex schedule for employees, he said.
“I think the baseline will evolve,” Joseph said. “I think usage of office space is going to change and the expectation that employees are there 9-to-5 on a daily basis is going to change.”
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Note: - These are about 'turnstile' numbers and not the percentage of leased space and watching trends for the balance of this year will be critical.
__________________
Cool... Denver has reached puberty.
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