How Commercial Real Estate is Evolving Post-COVID
Updated: Jul 28, 2021
How did the COVID-19 virus affect you?
The answers to this specific question can vary depending on each individual and sector. Some people may even give you a whole list of answers. We all thought that this virus would only be around for weeks, but weeks turned into months and now, it's already been a year. Without us realizing it, the world eventually shut down and took a rest for a while.
The COVID-19 virus may have affected some people for only a short period of time. But for many people, its effects are long-term and permanent. These effects have already caused people to lose their investments, physical assets, and even jobs.
We are sure that the COVID-19 virus has affected each of us in many ways. Correspondingly, the global economy has undeniably received a tremendous negative impact brought by this virus, and one of the most affected areas is commercial real estate.
Commercial Real Estate During the COVID-19 Pandemic Situation
COVID-19 brings a heavy burden to the commercial real estate sector. While we are trying to survive and live through the “new normal” individually, the commercial sector also tries hard to get back in the game. As we are all currently expected to do social distancing for our safety, most employers have decided to adapt work-from-home and skeleton workforce arrangements for their staff.
Trying to live through the new normal has closed a lot of opportunities in the commercial sector. Many businesses closed, and some employers chose to cut down the number of their employees. Either way, both closing or cutting down has resulted in an even higher unemployment rate. Because of this, the demand for commercial spaces has been put on the backburner for almost a year now.
The commercial real estate sector had been continuously growing during the pre-COVID era due to the emergence of many startup companies. These startup companies chose to put up physical stores for better visibility and customer acknowledgment.
However, the COVID-19 virus immediately hindered this growth and kept commercial real estate on the edge of falling since then.
These are the most evident impacts of the virus to the commercial estate owners:
Lowering of Value
Due to the reduced demand for commercial spaces, most commercial real estate owners have no other choice but to offer their properties at a lower selling value. Accordingly, the vacancy rate for commercial spaces is also increasing.
A lot of you have probably seen many vacant and closed commercial spaces during the pandemic. On the other hand, an investor would take this situation as an advantage to purchase more commercial spaces.
Thriving in a Digitalized World
Everyone wants their business to thrive. And in a world where most of our well-known commercial establishments are closing down their physical stores as they’ve been greatly affected by the pandemic, the emergence of online businesses continues to spread.
Today, the commercial real estate sector dives into the market to compete with the advantageous and up-to-date offers of putting up a digital business instead. Looking through the perspective of commercial real estate stakeholders, now it’s tough competition.
But how are they doing right now, and how are they coping post-COVID?
Commercial Real Estate Evolution Post-COVID
Laying out the negative implications of COVID-19 to commercial real estate, it is best for all involved stakeholders to learn how to strategize in adapting to the new and permanent changes caused by the pandemic.
Right now, several countries have already been trying to bounce back and live through the "new normal". While this might be a tricky feat for most countries, we have no other choice but to accept that the only thing we can do now is to ride through the post-COVID changes.
Workplace strategizing and planning is a must for commercial real estate stakeholders. Post-COVID, here are the few of the most critical changes and evolutions that are worth taking note for:
Importance of Space Planning and Designing
Pre-COVID, it was already established that utilizing the spaces in your work location is necessary. However, since the pandemic started, the importance of space utilization is now more emphasized.
Post-COVID, commercial spaces are expected to be designed with good ventilation, easy access features, and other more hygienic office equipment to use. Planning for a more sustainable and safer commercial space is the new standard for potential clients.
Rise of Hybrid Workplaces
Hybrid workplaces are expected to rise during the post-COVID era. Today, more people tend to look into efficiency and safety than anything else. Having a hybrid workplace means having a mixture of workers who are remotely working and working on-site.
The rise of this working arrangement will also bring a long-term effect to commercial real estate as the need for smaller space will be much more preferred by potential clients than acquiring a usual office space size.
In a post-COVID world, stakeholders must be willing to modify and accelerate their efforts to keep their business afloat. The traditional approach will not work, especially now that people are keener to choose the most suitable commercial spaces for them.
Meeting the needs of your employees and potential clients is a must, but being able to align their needs following the post-COVID safety requirements is even more essential.
Generally speaking, if there’s one thing that we can consider as a good effect of COVID-19, it is the fact that the virus has reminded people of having a well-equipped and safe working space. Commercial real estate may still face a lot of possible challenges because of the pandemic. For now, the best thing to do is to be well-prepared and equipped with strategies for your company.
PlanWell Strategies can further help you plan and design suitable post-COVID workspaces.