Written by Paul Bubny and Republished with Permission From Connect Media
SIOR’s latest Snapshot Sentiment Report shows a significant increase in broker confidence for both the industrial and office sectors by comparison to the fourth quarter of 2020. While encouraging news, it occurs amid a landscape in which the path forward still isn’t entirely clear. To help illuminate that landscape, Connect spoke with SIOR CEO Robert Thornburgh about the broader business environment as well as the implications for commercial real estate. Here are the insights he shared with us:
Q: The current administration's plan to accelerate the rate of vaccinations appears to give occupiers more leeway in reopening their offices and also puts more pressure on them to do so. Are they ready for it? Do you see this accelerating occupiers' timelines for reopening?
A: I believe the overwhelming majority of businesses are ready to reopen – we are already seeing this firsthand. That said, depending upon the industry and location, you are going to see a variety of different scenarios here. Many corporations have publicly extended work from home policies while others are taking a contrasting approach and bringing people back into the office at a significantly increased rate.
There are many employees out there who are still anxious about the transition back to the office. This conflicts with many sales teams who desire to get back now for the unique information sharing, collaboration and camaraderie that occurs there.
We all need to understand it’s going to feel foreign for some time. That said, businesses are aggressively working to drive revenue, replacing what was lost over the last 12 months.
Q: For some time, we’ve been hearing about a “new normal” for office use: staggered work schedules with at least some employees working remotely on a more or less permanent basis, social-distancing protocols, a reduced need for space especially as it relates to consolidating from multiple locations. Has this scenario been changing as mass vaccination inches closer to reality?
A: In my view, there simply isn’t a one-size-fits-all type of solution. Needs are uniquely impacted by the company, the mission, the culture, the industry, and the specific roles people play – and I believe it’s healthy to acknowledge that we are still trying to figure this all out.
What we do know as leaders is that standing still is never a successful strategy. The pandemic has once again shown us the quick and nimble are winning. The difficulty in today’s environment is how a company challenges itself to maintain a relentless, enterprising mindset. Continual transformation isn’t easy for most. Office isn’t going away, but it’s hard to argue against reinvention ahead.
Q: Along with office owners and brokers, a general return to the workplace can benefit owners and tenants of retail- and restaurant-related spaces near office buildings. Does the accelerated timeline for vaccinations make a significant impact on the timeline for these sectors to recover?
A: No question. I know recently the Federal Reserve suggested the U.S. economy could grow between 5-6% this year – that forecasted growth is heavily influenced by increased vaccinations. The only way for businesses of all sizes and types to successfully rebound is to get consumers in a place where they feel comfortable doing the things they were accustomed to before the pandemic. That of course includes spending money at their local restaurant, taking vacations, and so forth.
Q: SIOR’s constituency includes industrial brokers as well. We’ve seen the industrial sector flourish during the pandemic thanks in large measure to the rise of e-commerce; how will the continued opening-up of city and state economies benefit industrial owners and occupiers?
A: For industrial markets across the U.S., the future looks bright. There is little indication that current momentum will cease any time soon. An extraordinary level of demand continues to exceed supply – this is true for investments, available land, or highly-functional, well-located logistics space for lease. While every submarket is unique, record breaking absorption, rent growth, and limited opportunities are driving this trend.
Many experts believe we will require more than one billion square feet of additional industrial space by 2025 to meet surging demand for space, all a function of e-commerce.
This article originally appeared on Connect Media.