The pandemic has been called an accelerator and is fueling trends that were already on track. Industry is the best example. The market benefited from the pandemic in many ways. On the flip side, office and retail properties were already set for big changes, and now those changes are hitting harder and faster than expected.
"Office and retail are two sectors whose challenges have really been brought to the surface by the health crisis. Both point to new opportunities for the renovation, repurposing and reinvestment of real estate assets to meet changing demand." Dianne Crocker, Principal Analyst for LightBox, tells GlobeSt.com.
The retail sector was already battling the rise of e-commerce. Now e-commerce is growing faster than ever as retailers must adhere to health and safety restrictions to keep customers safe. "Before COVID-19, retail's battle against e-commerce was well told," says Crocker. "Today, not only have the owners of 'non-essential' stores had to cope with lengthy closings, but an even wider segment of the population now routinely shop online, making the brick and mortar business environment much more difficult.
Retailers need to adapt quickly to stay in business. "It will be the survival of the fittest. Some stores will join the others that have already closed their doors, while others will get creative in giving consumers a reason to come into their stores," explains Crocker. "As a result, will give closed shops the opportunity to use new purposes for services in demand such as medical facilities, apartments or distribution centers. Others are reinvented in more experimental shopping areas. "
Office is in a similar situation. In the last cycle, companies adjusted and reassessed their workplace strategy. “Before March, the office sector in many metropolises like New York City was already suffering from an oversupply of office space,” says Crocker. “Today, after many months of managing a work-from-home workforce, there is no CEO who is not considering flexible work options and a reduction in office space requirements after COVID – with the exception of large technology companies like Google. ”
Companies will almost certainly adapt the way people work. "Many will find that they don't need 100% of their full-time office staff. Some may reduce their headquarters in the downturn in favor of suburban office space, which employees may be more comfortable to commute to," says Crocker Rethinking office space, we will see the demand for flexible workspaces that accommodate new pandemic protocols and a trend towards smaller spaces outside of central business districts. "