Whats Happening with Commercial Property Post-Covid?
As COaVID-19 swept across the country and we moved into a self-isolated lockdown for nearly two months, the result was many empty office spaces lurking in ghost towns, and many 9-5ers adjusting to working from home. As we adjusted to this, many businesses realized there was still the same amount of productivity from those working from home, and as we started to return to normal many office workers – and the companies they worked for – have begun to change their model of working, including shifting to a remote work schedule. And as many businesses emerge from the post-covid lanscape, many will be looking for ways to cut down on cost, and this could mean slimming down or completely retiring office spaces, which could change the commercial property market in many different ways.
Most major businesses will be looking for ways to offset profits lost during the pandemic while trying to get back on track, this could potentially mean keeping their basic business model but slimming it down. Cutting costs where they can and trimming it down to a smaller and hopefully more efficient operation. For others it may mean a more significant change of direction, perhaps concentrating on a different segment of the market, or completely reorganizing the way they operate. We are already hearing a lot about businesses both large and small making these types of decisions.
n its latest Financial Stability Report the RBNZ addressed this potential change, “For office space, the recent experience of remote working may encourage firms to extend their flexible work arrangements, decreasing demand.”
But many are sticking by commercial property, stating that the death of working in the office may have been greatly exaggerated. Many white-collar workers adjusted to working at home during the coronavirus lockdown, but we are social creatures, and commercial real estate experts predict that practicalities mean people will return to the hum and professional environment of the office.
Kelvin Davidson, senior property economist at CoreLogic, was among those expecting people to drift back to the CBD, stating, “We’ve been a little bit more cautious about [a large scale shift to working from home]. It’s all very well in principle, but I don’t think there’s going to be a wholesale change.”
A senior urban designer at architects Jasmax, Andy Brangwin, agreed it was difficult to know if there would be as much empty space as people were expecting, “The slowdown in commercial activity we have seen is a result of mainly a delay in decision making – developers waiting to see what happens rather than potentially a long term trend.
“Yes, working from home has been proven to be pretty efficient, but after several months we are seeing the desire to return to face-to-face environments,” Brangwin said.
It will remain to be seen in the second half of the year how the sector will be impacted and if there is a major shift in how the traditional workspace operates, and if there is, could we see commercial spaces be re-developed into residential housing? All that we know is that the post-COVID months will be interesting to watch in moth sectors.