Right now, everyone is being forced to work remotely, but the truth is not all companies are struggling with it, some are actually thriving. The stay-at-home order, due to the coronavirus pandemic, has awakened many business owners to the possibility of increasing remote working in their business. This makes you think, what happens to commercial office space when the coronavirus is over?
To state the obvious, extracting rent from anyone right now is proving to be very problematic. And the problem’s only getting more dire for landlords and building owners. As small businesses and restaurants are beginning to be less and less likely to be able to pay rent, and more likely to go out of business, or vacate their space even, large chains and large businesses are also beginning to not pay rent and try to negotiate, and restructure leases with their landlords, as well. WeWork, one of my least favorite companies ever, is obviously not paying their rent because that’s what they do, but then, of course, they are still charging all of their small tenants in their spaces their rent.
So while some tenants are struggling to pay rent and may not survive this pandemic, other companies are starting to realize the power of remote work, and how remote work is not having the negative impact on their business that they thought it would, leading some companies to reconsider the idea of office space in general, or limiting the amount of office space that they’re currently renting. So we may be coming out of this pandemic with a situation where a lot of larger tenants are reducing their space needs because of the ability that they have seen because of this pandemic to have people work remotely, and it not impact their bottom line.
It’s not all bad news for landlords though. A decade ago, the standard space for one employee was eight by eight. By 2015, it was six by six. By 2019, people were being sat right next to each other and sharing desks. By 2019, 10% of employees in America did not have their own desk at the office. Employers were making people share desks, people were coming in and using common areas or conference rooms.
This was the shared economy, this is what office space had become. Benching, where you were sitting employees side-by-side at a six-foot long bench and also across from each other, has become a major thing right now in the office space world. But post-pandemic life is about to radically change all of that that has occurred in the last 10 years. Conference rooms designed for 16 people are now going to be meeting rooms for six people. You’re only gonna be able to sit two people at a bench where you normally sat six. Exterior offices are going to be the norm again. Cubicles at least six-feet high will almost be requirements by employees to have to come into the office.
When the coronavirus is passed, employers are inevitably going to allow employees to more often work remotely. And in all likelihood, this will reduce their need for office space in general. But with this new office environment that people are going to have to work in, you would expect that these two things will in fact balance each other out at the end. There will be more people working from home but you’re gonna need more space for each employee that you have in the office and office space is a necessity.