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The New Normal: the Impact of COVID-19 on the Commercial Real Estate Industry

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Although stay-at-home orders have loosened throughout the country, COVID-19 continues to affect the world. Several industries are still trying to recover and cope with the new normal, including the commercial real estate (CRE) industry.

With an estimated value between $14 and $17 trillion, commercial real estate is a valuable asset class. There’s a growing interest in CRE because of its diversification benefits.

Needing Office Space Amid the Pandemic

With the spread of COVID-19, organizations are encouraged to apply a remote work system. Workers who previously commuted to the office had to adapt to using online tools to interact with clients and colleagues.

This increase in remote work leads to concerns about whether the need for office space will become obsolete. However, it’s unlikely that the pandemic would eliminate the need for workspaces in the future. Some industries would still need office space, as the nature of their operations requires close collaboration and face-to-face interaction with clients.

It’s recommended that businesses rethink their operations and determine if they need office space or if they can work remotely. If they need space, they might have to decide to downsize the area and limit the number of people reporting to the office.

Minimizing the Spread of COVID-19

For businesses that decide that office space is essential, precautions should be made to mitigate the spread of the virus.

Landlords of commercial properties need to ensure that there are enough hand sanitization stations for people coming and going the property. Entrances must be limited, and automatic doors can be considered to minimize the spread of bacteria and germs from door handles.

Regular cleaning will be a commercial property’s additional layer of protection. Hiring janitorial or cleaning services is more critical than ever. Landlords might consider hiring other staff to clean high-traffic areas. These employees should wear the necessary personal protective equipment.

Landlords should also educate their tenants on proper etiquette to mitigate the spread of the virus. Employees, visitors, vendors, and guests are allowed entry only when they wear a face mask. Once inside the building, they must practice proper hygiene and cough etiquette, as well as social distancing measures.

Standardized and Stringent Protocols

The building owners, landlords, employees, and tenants must be on the same page when it comes to ensuring everyone’s safety.

All stakeholders must closely communicate with each other and be transparent with the latest news. All workplace guidelines and policies must be restructured to adapt to the new normal. Landlords and building owners must emphasize the consequences of not following these protocols.

The pandemic also reemphasized the importance of technology in managing facilities. Landlords should consider the use of property technology software to minimize face-to-face interactions with employees, tenants, and guests.

Landlords must also be flexible in terms of negotiating with their tenants. In these challenging times, tenants might be struggling to pay their rent. Alternatively, they might consider other options that involve downsizing their office space or using their place for other purposes.

Since the spread of COVID-19, industries worldwide are forced to rethink how they do their business. With no sign of the pandemic ending soon, rethinking operations allows businesses to recover quickly and stay ahead of their competition.