The COVID-19 pandemic has had a huge impact on economic activity. The pandemic has not discriminated for any business sector (essential or not) affecting balance sheets and bottom lines of nearly every business. While many of these businesses do not know the long-range impact that will occur, modeling indicates that most of the businesses that continue to operate after the pandemic will pick back up rather quickly; or at least those in Texas will.
The area that will continue to be impacted is the real estate market, more specifically the commercial real estate office market. The pandemic necessitated stay at home, stay safe orders for numerous communities throughout the nation, thus forcing work from home for much of America. During this time the commercial office market has seen some of the most unstable action ever, "Are they going to pay their lease this month?" "Are they going to opt out of their lease?" "What if they don’t need the complete square feet anymore?" All valid questions!
While the research is still underway that will explore the productivity of an employee while working from home, the high level survey from Jefferson Digital indicated that overall employers are pleased with the amount of production from employees during the stay at home time. Ironically, the feedback from the same survey indicated that while most employees were working from home, many of the employees that responded indicated that they were much more productive over an eight hour period of time even with frequent breaks considered. However, this may not be good news for the commercial real estate market.
A general statement from many of the Texas Commercial Real Estate Brokers indicates that there are more unknowns than knowns in their market. Most agree that the work from home has increased the number of employers who will look at this as an option going forward, for at least the highly productive within a company. Most also agree that the guidance to maintain social distancing has pushed the office occupancy downward, and the reduced numbers of people in a building is substantial in many cases regardless of the size of your building. 6 feet separation is 6 feet!
The bright side of this is that the geography and access to a talented workforce can work to the favor of many Texas communities. Texas office space is still considered to be in-demand by most standards across the nation. But what is the new definition of in-demand? While work from home is not a new concept, the thought that there may be an impact on commercial office space is new.