Coronavirus disease (COVID-19) – The Beginning of the End for Commercial Office Space
During the course of our qualitative research at Ideba, we interview a lot of fascinating people from around the world. In the past week, that has included senior executives from Europe, Asia and the Americas, the vast majority of whom were working from home as a direct result of the Coronavirus disease (COVID-19) outbreak.
Several pointed out that the shift in workplace habits from office to home is one that may well stick – with real estate often the second highest overhead for organizations after labor. The vast majority of office-based organizations have transitioned over the past week, leveraging tools like Microsoft Teams and Zoom among others to sustain their businesses. Many are noting an increase in productivity with less meetings, and reduced/non-existent commute times. Reality is the longer the virus situation goes on, the more employees get used to working from home, and the more organizations recognize the potential cost savings to be realized from a smaller real estate footprint… not to mention the potential environmental benefits.
Late last week, famed investor Carl Icahn announced he is “shorting” the commercial real estate market, which he says is going to ‘blow up’. Couple virus impacts with constant pressures on retail margins from Amazon that leave an increasing number of stores shuttering operations; and you can see why the writing is likely on the wall for commercial real estate companies. Simply put, there likely isn’t going to be the demand long-term with a new generation of workers that are increasingly comfortable working anytime/anywhere.
When Ideba was founded 10 years ago, it was built using the “virtual team” model. The last few weeks have been “business as usual” for the team, and most importantly our clients. The team still benefits from meeting up at QBRs, and real estate savings allow us to give away over half of our annual profit, and for the team to spend quality time in some great locations.
No doubt Wall Street is looking for other sectors that will gain/lose with the inevitable changes tied to the Future of Work, along with global business leaders, looking to gain a competitive edge from the shift in business models. My hope is those same business leaders can equally prioritize how they can give back more of their real estate savings to non-profits, and those in our society most in need, so that ultimately this negative situation can lead to a change of the better in our society.
Would love to hear how your organization is adjusting to the new reality of working from home; and what you see as the potential long-term benefits to society as a whole. Drop me a line at: davids@idebamarketing.com
– David Sly, President
