As states lift stay-at-home orders and gradually let businesses reopen, companies are gingerly allowing white-collar workers to return to office buildings even while weighing how much they really need the space, according to a USA Today commentary. About half of U.S. employees worked from home during the COVID-19 shutdowns, according to the Brookings Institution. And many companies — including Facebook, Google, Twitter and Morgan Stanley — plan to continue allowing at least some staffers to telework at least some of the time even after a vaccine is available and the health crisis is over. That could mean a seismic downsizing of the $2.5-trillion office market and the vibrant urban centers that have flourished around them, battering the restaurants, bars and high-end retailers that rely on white-collar workers’ lunch and after-work spending. “The genie is out of the bottle,” with many companies now embracing remote work, says Victor Calanog, head commercial real estate economics at Moody’s Analytics. And if there’s a major shift to telecommuting, “Do we really need that much office space?” To be sure, analysts don’t predict an abandonment of American offices. In fact, more office space could well be needed in the short term to accommodate social distancing requirements until a coronavirus vaccine is widely distributed, presumably next year. That could spark more leasing and construction activity in less-expensive suburbs. And over the long term, most companies likely will still want most workers in the office at least some of the time to promote collaboration and morale, some analysts say. “I don’t see a situation where offices completely die,” says Paul Leonard, managing consultant at CoStar, a commercial real estate research firm. But even a noticeable pullback in the U.S. office footprint could have a tangible impact on local economies, reducing city tax revenues, dampening office construction, increasing defaults on commercial loans (and thus hurting banks) and threatening nearby restaurants and shops, say Calanog and Mark Zandi, chief economist of Moody’s Analytics. Read more.
Occupancy issues are at the heart of many significant retail cases, as detailed in the ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available at the ABI Store.
