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.
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
CDC Cultural Changes To Offices
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.
There is a sad abundance of New York City commercial real estate properties that are vastly outdated.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.
Until these older and outdated buildings meet new regulations, their value will drop.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!
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.
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.
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.
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.
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.
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.