COVID Musings 5
Changing Real Estate
What impact will work from home have on the Real Estate Market?
The obvious will be a reduction in demand for commercial office space in center cities. Companies will increasingly question the logic of why they should have a large centralized office in a high rent area that takes everyone a long time to get to. I would look for a decrease in rent escalation, a decrease in average occupancy, and lower valuations as smart investors will be questioning the long term returns of these properties.
In New York, the demise of We Work, who was rumored to have leased a significant portion of the market, will accelerate this trend.
But who will benefit? Perhaps regional office centers, or even ex-urb or bedroom community just in time offices offering better blended meeting/teleconferencing support. Whoever can figure out how to seemlessly blend work from home and work from office will win the next race.