New Office Environment

Last week, the Center for Disease Control released a wide range of health recommendations for offices that are hoping to reopen amid the continuing spread of coronavirus. These changes will dramatically alter the office environment.

The recommendations will also have an impact on New York City commercial real estate. Notably, older buildings that lack healthy environments for tenants. These changes carry positive and benefits that need to be recognized and discussed.

An Overview Of CDC Recommendations

To understand what these new guidelines are and how they will change the office environment and New York City commercial real estate space, here is a brief outline of what the CDC recommends. Some changes are technical, while others are aimed at office culture in general.

CDC Technical Recommendations For Office Buildings

Increased importance of air circulation systems. Existing systems should be in top working order.
Due to months of office inactivity, stagnant water can be a source of harmful bacteria that needs to be appropriately treated before onsite work resumes.
Checking water quality is doubly important because of the increased emphasis on proper and frequent hand washing.
Buildings should also be checked for mold growth due to inactivity that could harm immune systems and make employees more susceptible to contracting coronavirus and other maladies.

CDC Cultural Changes To Offices

Employees should abstain from physical contact with one another, including handshakes, hugs, or fistbumps.
Employees should limit the use of carpooling and taking public transit. Ideally, office workers will commute alone to their jobs.
Washing hands should be done immediately upon arriving to work and frequently throughout the day.
Upon arrival at work, employees should have their temperature taken and be individually screened for symptoms.
Masks should be worn at all times in the office.
Desks should be seated at least six feet apart or separated by transparent shields and other physical dividers.
Single-serve coffee packets, water bottles, and other items should be used instead of common ones.
Cafeterias and break rooms should be eliminated, and employees encouraged to eat at their desks or outside the office.
When possible, employees should work remotely from home.

The Good News Of CDC’s Recommendations

There are a lot of recommendations and guidelines here that need to be deciphered. While change makes us all cringe a little, not all of these shifts are bad news. There is a lot of good that will come from this announcement.

Outdated Office Buildings Will Need To Update

There is a sad abundance of New York City commercial real estate properties that are vastly outdated. This means sluggish air circulation systems, poor water quality, the proliferation of mold, and several other no-no’s on the CDC’s new office environment checklist.

If these recommendations evolve into laws, these property owners will have to retrofit their buildings with new systems and other improvements that offer exceptionally healthy working environments.

Less Competition For New And Updated Properties

Until these older and outdated buildings meet new regulations, their value will drop. There may be a period where many older buildings are off the market until they finish overhauling their systems.

This presents a significant opportunity for the proactive owners that have already updated their buildings to provide a healthy office environment. With less competition, there is a lot more opportunity for these owners!

Remote Workforce Limits Public Transit Congestion

If you use any public transportation method, you know how overcrowded and dated these systems are. With office employees relying on their means to commute to work, these old transit systems will get a much-needed breather.

This shift will also help slow the spread of coronavirus and better protect us against a future surge in cases. Fewer people crammed onto subways and busses limit how many people are potentially exposed to a person with the virus.

The Potential Negatives Of CDC’s New Recommendations

Now onto the bad news. Every office building will be affected by these new guidelines. Even if your building meets all technical aspects, the cultural shifts will potentially affect the New York City commercial real estate sector.

Potential Increase In Foreclosures

Many New Yorkers, including property owners, are already feeling massive financial woes from the COVID-19 pandemic. For the buildings that require technical upgrades to meet CDC’s standards, it may be the nail in the coffin.

The extra burden and costs of making these changes and upgrades may lead to an increase in defaults and foreclosures. As history will tell you, a spike in foreclosures has a rippling effect that will impact the entire industry.

Less Reliance On Office Environment

With an increased emphasis on remote workforces and mobile offices, the need for having an established, physical office location deteriorates. This means that the market for New York City commercial real estate may shrink.

There may be fewer companies interested in establishing a physical meeting location, especially with the guidelines making it difficult for employees to collaborate, share, and have fun within the office.

Office Buildings In Design Limbo

Over the past few years, the increasing growth of TAMI (technology, advertising, media, and information) companies in New York City caused a shift in what tenants found desirable from office buildings. The traditional layout with cubicles and private offices was taking a back seat to open designs with lots of collaborative and multi-function spaces.

With the CDC’s recommendations, cubicle partitions, and enclosed offices may not just be a preference; it may be mandatory! This will cause some office spaces to find themselves in a weird limbo between moving forward or stepping back.

Conclusions

The jury is still out on exactly how long we will be affected by the coronavirus. Thus, we also have little idea of how long these recommendations will stand, and if they will become mandatory laws shortly.

While change is always hard to swallow, and the radical shifts in New York City commercial real estate may cause us to stress at times, the long-term outcome will be okay.

After all, office buildings should always provide healthy environments for tenants to work in. These new changes will force the hands of some owners that control buildings in dire need of health improvements.