It is becoming increasingly apparent that industries will be permanently affected by the COVID-19 pandemic. Economic recovery will be slow as consumers and businesses alike adapt to the new normal of social distancing, limited gathering sizes, and an increased emphasis on personal hygiene and public health. Even when (and if) government restrictions are loosened, behaviors that have arisen during the pandemic are likely to persist for even longer as the population slowly overcomes its fears of resuming everyday activities.
Commercial real estate (“CRE”) is no exception, and as new ways of working emerge, the way that CRE does business will have to change as well. Specifically, CRE will have to increasingly rely on virtual collaborative experiences in response to three major shifts for the industry, which are summarized below.
First, office spaces will need to be permanently redesigned to accommodate social distancing. Desks will be stationed further apart and walkways will be designated as single-direction, requiring more square foot per employee. In addition, building owners will need to invest in sanitizing technologies, such as new air filtration systems. All of this will put increased pressure on building owners to differentiate their properties, and to lean on online offerings to clearly demonstrate that differentiation to prospective tenants.
Second, remote working will become more common. In addition to the obvious benefit of reducing transmission of the virus, the remote working “experiment” during COVID-19 has resulted in increased worker productivity and happiness, suggesting it is here to stay. As more people work from home, this will further reduce the need for physical real estate, likely putting price pressure on building owners. In response, building owners will look for any way to cut cost, and will likely demand reduced commissions from brokers. Brokers, in turn, will rely on new tools--including virtual collaboration solutions--in order to do more with less.
Third, real estate discovery as a process will move online. The days of numerous, inefficient in-person site visits are behind us, and tenants will increasingly rely on virtual showings to narrow their search before selecting a property that fits their needs. Yet, as tenants will demand more out of their physical properties in a post-COVID world, they will be no less discerning, and will need virtual solutions to help them find their perfect match.
What does this all mean for the CRE industry? Of course, building owners are worried. As the pandemic rages on, no one is visiting properties, deals are stalled, and they are in need of a way to demonstrate property value, quickly. They are also in need of a roadmap to navigating the post-COVID world, in terms of renovating and/or repositioning their properties. Tenants, meanwhile, still need to experience a property before making their decision, and need someone to act as an advisor throughout the process. Thus, brokers will need to act as a solution provider to increase activity and drive decisions. To do this virtually and effectively, brokers will need to innovate.
In the new normal, a broker will need to be agile, efficient, and responsive to her clients. She will need to be able to deliver value-added solutions, virtually. And, she will need to enable online collaboration between tenants, owners, property managers, architects, and all other relevant stakeholders.
So what is the solution? Current virtual tours do not cut it. They are not scalable or interactive enough to drive decision-making. Instead, we will need to do for places what video conferencing has already done for faces. That is, tenants, owners, and brokers need an online collaboration network specifically designed for the unique needs of the CRE industry.
Specifically, a winning platform will need to enable cross-stakeholder collaboration to accelerate deals. It will also need to utilize existing content to quickly create productive virtual experiences. And finally, it will need to facilitate health-driven rapid space redesign to meet the needs of tenants in the post-COVID ways of working. Brokers who innovate and adopt these technologies will persist, and even thrive, in the new normal. However, brokers who instead choose to continue the old ways of working will struggle to effectively serve their clients.
In closing, even after COVID-19 is resolved, its effects on CRE will persist. Tenant standards will be raised, and in-person visits will be reduced. Brokers are in need of value-added virtual solutions to enable them to do more with less.
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