Considerations for a Post-COVID World In Commercial Real Estate
"Return to normal" – it's a phrase frequently used in the race to control the COVID-19 pandemic. It's thrown into conversations invoking a light at the end of the tunnel and into ones that are designed to measure what still needs to be done.
While the "return to normal" may signal an end to things like stay-at-home orders and mask mandates, it won't be a simple flip of a switch back to pre-2020 processes and procedures. In a post-COVID world, returning to normal involves getting back to life and business while also coming to terms with a newly altered reality.
Questions for a Post-COVID World
Should we keep up some of those extra hygiene practices to curb flu seasons of the future?
This includes encouraging mask use and preventive hygiene during the flu season to prevent the spread of illness.
Does working from home provide benefits to workers and companies beyond COVID-19 spread prevention?
Some businesses have noticed an uptick in productivity and cost savings since shifting to remote operations. Factors like these will be important to consider in the future.
What other operational practices became standard during the pandemic that might be worth keeping?
Some operational changes that became pandemic standards have proven to be effective enough to be considered post-pandemic standards as well.
What's Next for Real Estate?
According to Deloitte, many real estate companies spent a large part of 2020 in the 'Respond stage,' outlined in its report, "The heart of resilient leadership: Responding to COVID-19." This stage involves dealing with the present situation to manage continuity – liquidity management, operations and tenant support, and remote working and technology usage.
As vaccine rollout continues and a sense of normalcy continues to creep forward, many have moved into the 'Recover stage' and are looking to make it to the 'Thrive stage' soon. These stages involve assessing new business opportunities and threats, capabilities, assets, and relationships. This stage isn't looking so much at a return to a normal as we once knew it, but rather to the "next normal."
New questions will arise that commercial real estate will need to address. These questions include:
- Will businesses look to jettison their office spaces altogether, or will they want to have a lighter in-office presence?
- What will building tenants need in the future, and what will they value going forward that is different from pre-COVID priorities?
- What are the costs associated with investments to address these tenants' needs – improved ventilation, space design, etc. – and what type of maintenance goes along with them?
Deloitte notes a need to adapt to these shifts in tenant preferences, many of which could be long-term. Many offices have been shut down for so long that tenants have become more accepting of remote work, and a return to physical space will be more gradual. More than a year later, the way we interact with physical commercial spaces changed, and needs and preferences have and will continue to evolve. Real estate companies must think about long-term adaptation in areas such as leasing models or space design.
Properties that remain vacant in the continued long-term do not necessarily need to be a liability. With risks like fire, vandalism, and burst pipes, all buildings need proper coverage regardless of whether they are occupied full-time, part-time, or completely vacant.
RCM&D Can Help
Real estate companies have a lot on the line as we move toward the "next normal." Talk to a trusted RCM&D advisor today for more on how to protect your real estate properties and set your business up for success in the future.