Is ‘Office Space Dead’ After COVID? Far From It.
Within mere weeks of COVID-19 and remote working, commentators had written the obituary for office space, claiming that the post-pandemic life would spell the end for traditional work spaces and commercial real estate.
However, with recent data from real estate professionals and tenants alike, it is abundantly clear that office space is still valued and will continue to provide benefits for both businesses and their clients.
Every year, the Los Angeles County Business Federation (BizFed) develops and releases a pulse poll aimed at raising awareness on key issues that affect businesses in that given year. Of course, the past year has brought many challenges related to COVID-19, and the results of the poll are reflective of that.
Over 214 organizations participated in the study, which spanned across 19 different industries across the business industry. Respondents include a diverse array of stakeholders, including owners, CEOs, and managers.
Sustained Interest in CRE Office Space
In Fall of 2020, 41.4% of businesses reported that they were either not continuing their leases or were unsure. Reasons included a shift towards remote working, or reduced profit margins to cover the cost of office space.
However, BizFed's newest polls indicate improving conditions, with only 15.3% of businesses reporting that they will not renew their lease. 13.3% report that they are still unsure.
Moreover, it's important to note that some tenants who decide not to renew their lease will instead find other commercial spaces that will suit their post-COVID needs.
Though remote working will become a staple even as the economy re-opens, commercial landlords can still expect a sustained demand for commercial office space. After such a long period of social distancing and isolation, physical workspaces will offer important opportunities for networking and connection.
Moreover, with over 40% of respondents expecting their workforce numbers to increase, the future remains optimistic for both commercial property owners and businesses alike.
Though there still remains a level of uncertainty moving forward, it is clear that commercial office space is still needed, and will continue to be a staple of the industry.
Dissatisfaction towards Government Responses to Crises - Homelessness and COVID-19
For the 9th year in a row, high taxes and fees continued to be a high priority issue for LA County businesses in 2020. However, the 2021 poll changed that trend, with homelessness and housing unaffordability being the top concern for businesses.
95% of respondents held the homelessness crisis as extremely critical or somewhat critical, and 82% said that local and state governments were not doing enough to address the issue. Other key issues for businesses include high taxes and fees, crime, education, and legislative gridlock.
Furthermore, the poll also revealed dissatisfaction among businesses regarding government responses to COVID-19. 40% said businesses felt hindered by federal state and local COVID-19 programs, while 36% said they didn't feel any impact at all. In the future, respondents say they want the following:
- tax deductibility for COVID-19 expenses
- grants for improved HVAC systems
- reduction of payroll taxes
- liability protection post pandemic
- economic relief