Investor gossip from NYC – the office evolves – The Property Chronicle
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Investor gossip from NYC – the office evolves

The Fund Manager

For almost a year, we have personally witnessed friends and colleagues sharing pictures of their working-from-home digs. At the onset of the pandemic, we would see shots of a laptop on a bistro table situated on patios, balconies or even poolside. By last summer, we noticed more people converting under-utilised areas of their homes to home offices. Now, after more than 10 months, these setups have become much more sophisticated – usually featuring a dedicated, L-shaped desk fully equipped with external monitors, lighting kits for video-conferencing, plants and other decorative desk items, along with co-ordinated wall decor that promotes hobbies, family members, and even a political viewpoint or two. 

If you are like us, we are at our respective desks for at least 10 hours a day. So we like to ask: what does your Pandemic Paradise look like?

Jesting aside, how do these trends affect the future of the traditional office? Many headlines have quipped, predicted and espoused the past, present and future for traditional offices. Can there be any office real estate winners who will benefit from this pandemic? What will the offices market look like a year from now?  How will covid-19 shape the environment in 2022 and beyond?

Many office landlords will tell you that the office building is far from dead. They avow that people inherently want to congregate and collaborate. In March 2020, Anthony Malkin, CEO of Empire State Realty Trust, said: “Since covid, we have only had people sign leases, we haven’t had anyone move out… In a post-covid-treatment, vaccine, herd-immunity world, everything’s going to go back to the way it was.”

It is safe to say that office operators have identified a progressively shrinking footprint in office space needs, due mostly to technology, for more than a decade. Law firms that used to have extensive law libraries and file rooms have been able to move a lot of that online. Collaborative work environments with ‘bullpens’ were replacing individual offices, hence reducing the footprint further. The question now is: how much has the pandemic shrunk office space needs going forward?

As office needs continue to evolve, office landlords have been using the pandemic as a time to spruce up their properties and renovate HVAC systems.  With cleaner and newer technology becoming available, office landlords should be able to pass on these costs to their tenants so that employees feel ‘safer’ coming to the office every day. Or will they?

Landlords are listening to their tenants in trying to figure out ways to make them feel safer inside the office building

The Fund Manager

About David Auerbach and Mary Jensen

David Auerbach has covered the REIT sector for over 20 years as an institutional trader out of Dallas at Green Street as well as Esposito Securities, and joined World Equity Group in November 2018. He is also a consultant with IRRealized, LLC out of Scottsdale, AZ, helping to build out corporate access with REITs and ETFs connecting the various companies directly to advisors, family offices, and other brokers among other investor outreach initiatives. Mary Jensen, Founder & CEO of IRRealized, LLC, is a proven strategic communicator and capital markets executive with progressive in-house experience in corporate strategy, marketing, business development and investor relations. She has worked in REITs for more than 19 years with several prominent REITs, such as Douglas Emmett, Inc., Healthcare Trust of America, Essex Property Trust, Inc., Spirit Realty Capital and Mack-Cali Realty. She is an active member of the National Investor Relations Institute (NIIRI) and the National Association of Real Estate Investments Trusts (NAREIT).

Articles by David Auerbach and Mary Jensen

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