This BOOQED webinar tackle issues regarding real estate during and after the Coronavirus pandemic. Our panelists include Yvonne Lim, managing director of The Executive Centre. Bastiaan van Beijsterveldt, director of occupier services at Colliers International, and Yves Luethi, co-founder and director of Talox.
Topics such as workplace trends, strategies on long-term planning and tenant concerns were discussed within the parameters of such uncertain times. We have recapped the key takeaways from this discussion in this blog post.
Watch the full webinar on Real Estate Planning After COVID-19 here: link
Shifts in the Status Quo: Observations from the Workspace Industry
Flex space operators have seen more business continuity inquiries from corporate-sized companies, with the majority opting for dedicated offices rather than coworking arrangements. Even though leasing activity had slowed down during the peak of the COVID-19 pandemic, the outlook for the industry is optimistic as flex spaces offer an optimal way for corporates to manage their workspace needs during a volatile business environment.
With the onset of an uncertain economy, tenants and landlords can sometimes not see eye-to-eye as both sides try to manage P&L. Tenants are reconsidering lease terms for cost savings, but landlords are looking to increase rental activity.
As tenants evaluate their workspace needs, they're looking at what they need for both the short-term (social distancing and hygiene measures, and immediate rent relief) and the long-term (steps to take after work from home and overall business strategy). Landlords and operators have to adapt quickly to provide for both these short-term and long-term needs, as it will likely be a tenants' market in the near future.
Flex space operators moved quickly to enabling sales and tenant support remotely through video as offline activities became more restricted. Technology has also been essential for operators and landlords to improve safety levels for their space, for example, through contactless space access.
There is still plenty of room for innovation in the market to help improve necessary processes, such as executing contracts quickly, tracking entry and exit into the space, ensuring adequate social distancing within the building, and strengthening the supply chain.
COVID-19 may be the much-needed catalyst for the commercial real estate industry to break away from the traditional processes that have plagued it for decades and fast-track innovation.
Recommendations for Long-Term Real Estate Planning
Companies should consider the following factors for future workspace decisions.
It is difficult in this current climate to predict factors like cash flow and headcount. It's ideal to have flexibility built into lease terms for the next 12-24 months. This flexibility can come via flex-and-core and adjusted lease agreements.
Whatever the mix of flexible solutions you go with, just remember to plan with the ability to easily scale up and/or down.
Consider splitting teams into multiple locations in order to manage risks from area closures and exposure from public transport. Also look at factors such as social distancing guidelines, a change in the frequency of in-person meetings, and security with building entry.
This time away from the office is also a good opportunity to re-evaluate the role of a physical workspace for the business. For example, what role does the office play in your corporate identity? Did various teams within the company adapt to remote work well, or did satisfaction and productivity drop significantly? These will also help inform workspace planning decisions.
To improve the safety and hygiene of the workspace, both landlords and tenants alike must adopt the basics of temperature checking and frequent sanitation of the workspace. Social distancing should also be viable within office spaces and the building as a whole.
Here are certain measures you should consider with your workspace plans:
- Increased disinfection activity in compact spaces with high foot traffic, such as elevators
- Revised floor plans to encourage safe use of space (stickers on the floor as guidelines, etc.)
- Temperature-taking and use of contact tracing practices
- Seamless tracking and registration of building entry with technology
- Policies regarding the entry of visitors, vendors, and contractors
Above all, don't forget to keep updated on government guidelines on how to safely resume business operations from the workplace. (You can read workplace safety requirements from Singapore's MTI and MOM here: Link)
Recommendations for Landlords and Operators
Adopting technology to improve processes and maximize security within a space is a crucial move for landlords and operators to thrive after COVID-19.
While there's a slew of technology solutions in the market, make sure to find the ones that help you achieve your goals in tenant communication, lease management, building security procedures and management, and space usage. Long response times and inefficient processes don't bode well in securing a tenant's business, and also their ongoing trust.
In a tenants' market, tenants will remember the landlords and operators that worked with them in their time of need. Don't leave a sour impression with your tenant, regardless of whether they renew in the short-term or not.
Other tenant concerns in recent months centered around rent relief, payment structures, and managing P&L. Work closely with your tenants to give them flexibility with lease terms if keeping up with payments is a concern. This creates a win-win situation. Tenants can have confidence with their workspace provider, while space providers are able to be well-positioned as commercial real estate vacancies increase.
While it may seem like commercial real estate is hitting a rough patch, a lot of companies will likely still retain an office space for employee collaboration and to achieve other business outcomes. Demand for flexible spaces will continue to rise, with shorter-term arrangements gaining more favor with the market. By considering the points mentioned above, both landlords and tenants can survive the test of time by taking appropriate measures in real estate planning.
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