Will city commercial real estate be back?
Since the start of the pandemic, commercial real estate in major cities has taken a hit. With offices closing by the dozens and millions of people working from home, commercial real estate had a moment where it seemed lost forever.
With restrictions starting to lift, and many companies remembering how easy it is to conduct work in person, offices are starting to reopen. Workers are being asked to come back. But will commercial real estate return to its glory days?
Turn it into residential real estate
A lot of real estate agencies had the bold idea of turning commercial real estate into residential properties. These spaces aren’t going to have the luxury or exotic feel as beach penthouses. However, a lot of these office spaces could easily be converted and broken up into hundreds of thousands of apartments. The draw to such real estate is that a lot of these corporate buildings are located in the most prime areas of any major city. This allows owners and management companies to charge a nice penny in rent.
Of course, zoning laws would have to be changed. Many have seen this as a viable option for doing something with a space that is being underutilized. Can offices return and still be able to afford the spaces? Or will the spaces shrink?
Downsize
Downsizing office space has been seen as a viable option. This is due to many companies offering a hybrid setup for returning workers. Workers can either work full-time in the office or part-time in the office and part-time at home. With that, there is no need for extra space. If companies can downsize, they will be able to save money on square footage. Therefore, smaller offices can be created.
This can cut back on costs as more than one company can fit into an office space and the expenses can be split. With fewer employees having to be in the office in person full time, it won’t get overcrowded and people will feel more secure going to work.
Renting to freelancers
There is a huge boom in rental office spaces. Places like WeWork, Convene, and Bond Street offer monthly subscription services for people to access a shared workspace. If major companies are finding they have extra offices available, they can rent those spaces to freelancers who are looking for a spot to work.
Many people are tired of working from home. However, at the same time, they don’t want to go back to the office full time. As a result, they are more than willing to rent a desk a few days a week. This is extra income for commercial offices who could use the cash for the business and other expenses as workers return to the boardroom.
Commercial real estate isn’t dead yet. It may still have some life left in it. Going forward in the new world, the spaces can be used wisely making a lot of profit. Time will reveal it all.
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