What will commercial real estate (CRE) be like after the pandemic? In a matter of very few weeks, the pandemic has generally affected all sectors. People have had to adapt to physical distancing, which is probably the first time a global crisis has been experienced in the modern world.
Commercial real estate has seen impacts from the ongoing pandemic. Companies are now reviewing their need for office space since employees are working from home. However, the sector still has great hopes for reviving and becoming better in a post-covid era. Here is an overview of the commercial real estate industry after the pandemic.
The Physical Office Space
Is the office disappearing? During the early days of the pandemic, the need for physical office space was envisioned to decline. According to research by CBRE on 126 real estate executives, 41% of the executives said the demand for a physical office would decrease, while 38% said that it would still be necessary.
The demand for high-quality and spacious office space may increase due to the pandemic’s long-termed office densification effect. For instance, a company occupying two floors may see the need for using three floors to keep up with physical distancing.
Companies are likely to incorporate a hybrid working model. Employees can choose to work from home or in the office. Some people may have seen the importance of remote working since they do not commute. While others like the social interactions from a physical office. On the other hand, companies believe that optimum performance is achievable from the same physical place. Thus the possibility of retaining or even acquiring bigger spaces is a positive side for commercial real estate.
Technology Trends and Commercial Real Estate
Before the pandemic, CRE was working towards digitizing processes and providing technology-enabled services for their tenants. The crisis has brought about a greater need to digitize operations.
After the pandemic, CRE designs will incorporate high technologies like; 5G, teleworking, artificial intelligence, voice recognition & automation, and augmented reality.
The need to cut down on the company’s costs will need office space in the suburbs. Micro mobility will hence reduce the concentration of office spaces that are near public transport hubs.
Health-Focused Commercial Real Estate Designs
The design and construction of buildings will be more centered on the well-being of its occupants. Contactless appliances such as doors, windows, and lifts are expected to increase. The designs will also focus on high ventilation for the health and well being of the people.
Centralizing Real Estate Cash Management
Real Estate has always been decentralized, with many decisions being made at the property level. Given the uncertainty of the covid crisis, the management is providing more centralized cash management. The pandemic has led to the change of CRE cash handling and control.
The Covid-19 pandemic did not leave behind the commercial real estate. However, the sector is eyeing significant aspects such as technology and high office space need towards re-emergence after the pandemic. Despite the possibilities of people remaining as remote workers, CRE is looking forward to the need for improved spacious spaces by companies.