The Future of Work: How Hybrid and Remote Jobs Impact Commercial Leasing
We’re sure you’ve heard (probably over and over again) how much the pandemic has changed the way we work. It’s undeniable that office life has transformed, and while some workers may be returning to corporate HQs, many are instead setting up home offices and planning for a hybrid workweek. In fact, the amount of people who work remotely 5+ days per week has increased 2.5x since 2019.
The importance of people in CRE is undeniable—it’s an industry built heavily on relationships and interactions between multiple parties throughout the life of each deal. But it’s time for the world of commercial real estate after Covid to adapt to the changing needs of its consumers. Owners, landlords, and managers not only need to adjust expectations for their own employees (and mitigate the impact of hybrid working) but evolve processes and options for tenants as well. The social component of ESG is at the forefront of this movement, and the commercial real estate industry must recognize the value of social adaptation to successfully navigate this new era.
While the housing market boomed, commercial real estate faced challenges never before seen in the industry. Shopping centers became less desirable as shoppers opted to browse from the comfort of their couches—and far away from whatever pathogens may be lurking at the checkout counter. Office vacancies were up over 2 percent as employers felt the strain of keeping empty desks up and running, leading some to a decision to permanently close their office spaces in favor of keeping workers remote.
So, what does this mean for the folks who own those corporate spaces, office buildings, and storefronts? To combat these changes, many owners and landlords began offering concessions in the form of price reductions, rent discounts, and flexible lease terms. Tenants began to expect specialized leases that included clauses to make up for lost revenue in the case of a Covid-type event. But there are ways landlords and property owners can adjust strategies to make tenants happy and stay protected from liability and financial struggles. Let’s explore some possible solutions and find out what will happen in the world of commercial real estate after Covid.
Short-Term or Flexible Leases
What is a short term lease? Simple—it’s usually any lease that spans less than 12 months, but short -term leases can encompass any amount of time under a year.
While standard lease terms may seem like the safest bet, short -term leases often open the doors to a slew of new interested renters. 2020 saw the highest number of new business startups in history, and excluding all of those new business owners from your pool of renters would be a mistake. Offering shorter lease terms allows for a greater margin of error and enables startup owners and operators to make location choices that don’t lock up their funds for years to come.
Are short-term leases more expensive?
While turnover costs may be higher due to frequent tenant changes, short-term leases also allow landlords and property owners to adjust rent prices more frequently, creating a balance that helps make up for any increased turnover expenses. Even better news? Dottid’s Dynamic Projections tool can help you track and analyze these numbers based on your real-time data.
Key benefit for landlords and owners: Shorter lease terms mean more opportunities to renegotiate and adjust for changes in the rental market.
Leasing a Coworking Space
While old-school office buildings may be falling out of fashion, the future of commercial real estate includes new options for office space. Coworking spaces are on the rise, and this niche offers an intriguing opportunity for office owners and managers. Whether you opt to lease your space to several small businesses or individuals seeking a remote office outside their homes, you’ll find that the traditional office isn’t completely a thing of the past. There’s still a demand for this type of space, but since many employers are offering hybrid schedules or remote options, they don’t need the massive office floors they once did. The best coworking spaces combine the camaraderie of a traditional office with the privacy and comfort of working from home.
Key benefit for landlords and owners:
Breaking up your space into many small rentable units could actually increase your rental revenue.
Simplify Your Processes
The demands of the real estate market are changing faster than ever, which means processes and systems need to evolve, too. While it’s possible to hire an operator to manage your coworking space or double down on tried-and-true marketing and leasing tactics, it may be possible to streamline those tedious day-to-day tasks and get a better grasp on what your property has to offer by utilizing the right tools. Using Dottid, one Dallas brokerage was able to grow their portfolio by 2.5x without the need for any additional hires.
When your accounting, asset management, data collection and visualization tools are all under one roof, you save enough time to focus on the bigger picture and expand your portfolio with your next big thing—whether that’s a new purchase, a big sale, or a long-standing item on your to-do-list.
Key benefit for landlords and owners: When you’re ready to re-invest, Dottid’s interface covers more than just deals. The CapEx Projects tool lets you track budgets, bids, progress, and more. Do it all in Dottid.
Finding the Way Forward
Whether you own commercially leased office space and retail locations that are struggling to stay filled, or you’re looking to expand your portfolio to jump on the coworking trend and make some extra revenue, these options will help you move into the next age of commercial real estate after Covid. But it doesn’t end with the decision to pivot your approach to leasing—ensuring you’ve got the right infrastructure in place is essential to the success of any business. Tools like Dottid’s Asset OS guarantee that you can hold onto valuable learnings from the process.
However you decide to move forward in the future of commercial real estate, the right people and tools will make all the difference.
Do you operate a retail business? Check out our tips for retailers.
What is the Future of Commercial Real Estate?
The future of commercial real estate is full of opportunity. The pandemic has shown us deals are never guaranteed—but asset management will always be needed in the CRE space. In an industry that greatly relies on people and relationships, we’re bringing everyone into the fold, making insights, analytics and all your data accessible at every stage of the process: from the original deal to the tenant’s continued experience. The world will always be changing, and Dottid is always evolving to bring the commercial real estate industry along for the ride.