Prior to COVID-19, urbanization had been a significant movement in the U.S. and around the world. According to the Wharton School, over the past four decades, the number of people living in cities has doubled to over 4 billion -- over half the world’s population. Individuals were attracted to the urban lifestyle: exciting, fast-paced, and full of opportunity. Companies, in an effort to attract and retain top young talent, had relocated headquarters to urban areas as part of their recruitment strategy.
In the wake of the global pandemic, this trend of urbanization seems likely to reverse. Those features of cities are less enticing in the presence of prolonged social distancing. Already, urban residents are fleeing to the suburbs en masse, and major companies such as Facebook are pursuing remote working policies for their employees.
In addition to working remotely, many companies are expected to opt for more, smaller spaces in satellite offices, rather than the fewer, larger “headquarters” in urban hubs which were becoming increasingly common. This new approach would still allow a company to have dedicated office space for its employees that prefer not to work from home and maintain the benefits of in-person working, while keeping their employees safe from higher-risk urban areas. In addition, tenants are likely to pursue shorter-term agreements for their real estate needs, in order to accommodate a rapidly-changing post-COVID world.
These moves are not without complications. Companies would now need to find and maintain several office spaces, potentially spread across the country, rather than simply finding one space for its major headquarters. And, companies would have to do this more frequently, if signing more short-term agreements. This is a major undertaking for employees at companies charged with finding real estate, and for the brokers who serve them.
This added workload for tenants and brokers mandates new ways of working in commercial real estate (“CRE”) search and discovery processes. In-person site visits will no longer be as feasible, as the numerous properties in question will be spread across the country. However, even in the absence of these in-person visits, tenants will still want to experience properties before committing to a deal; that part will never change. Instead, tenants and brokers will turn to online platforms to experience places in real-time and drive decision-making. Furthermore, the added complexity of searching for (and signing on) additional properties will require on-demand collaboration features that are not widely available today.
In short, we are at a crossroads. Even as the short-term effects of COVID-19 begin to abate (shelter-in-place orders lifted, restaurants reopening, and more), it is apparent that the pandemic has set in motion several societal changes that are here for the long-term. More prevalent working from home, tele “anything” and some amount of de-urbanization is imminent, and whether it happens over the course of a few years or a few decades, the degree to which CRE will be able to manage the many shorter deals it creates depends on the industry’s willingness and ability to innovate. Online collaboration powered experiences are the answer, and place.net is positioned to be that platform for tenants, brokers, and owners alike.
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