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Commercial Real Estate Developers to See a Shift in Office Space Design

Posted by Eric Olsen, CPA on Aug 11, 2020 11:26:52 AM

Commercial real estate developers and investors can expect big changes in office space design and development as a result of the global pandemic. Businesses are already evaluating how to make their space work in the new COVID-19 environment. The increase in remote workers has some business leaders rethinking any plans they had for additional space. At the same time, however, most businesses need more space to provide a greater distance between workers in compliance with CDC guidelines.

What will these changes mean for developers and real estate investors, especially buying existing spaces? While many Texas developers are still in a wait-and-see mode, and significant changes will take time, what will these changes require, and what can we expect going forward?

Overview

Even before the pandemic, there was already a move toward more flexible work arrangements, which includes at least a partially remote workforce. In some cases, the result has been a decreased demand for commercial office space and a greater focus on retrofitting existing space. For example, many companies were already reducing cubicle space and creating co-working spaces instead.

Once the pandemic hit the U.S., offices across most business sectors closed in Texas due to stay-at-home orders. For the most part, the workforce has been able to make the transition quite well, using video conferencing and remote-access tools to conduct business. As COVID-19 cases continue to spike in Texas, businesses are examining ways to reconfigure office space to safely accommodate returning employees and those who choose to permanently join the remote workforce post-pandemic—if provided the option. In fact, tech giants Twitter, Square, and Facebook are allowing most workers the option to work remotely for the long term.

See related blog: Impact of COVID-19 on the Commercial Real Estate Market

Safety Calls for Reconfiguration

While there will be an uptick in the remote workforce, the continued need for face-to-face collaboration in the workplace will require significant design changes. At the very least, the post-pandemic office will require much more space per worker and more video conferencing capabilities to allow for a blended home and office workforce. In addition to panels between workstations and dividers at conference room tables, all common areas such as lobbies, conference rooms, and reception areas are being modified. Bathrooms are being retrofitted with touchless fixtures and dispensers if they didn’t have them before. Watch for additional hands-free measures, including foot pedals, to open doors and voice-activation technology to eliminate the need to touch elevator buttons and door hardware.

Design Changes: Modification of Spaces

There are only so many employees that can fit in spaces when they have to be six feet apart. Even if tenants decide to decrease square footage, offices will likely feel more spacious. Other safety measures that will likely become standard include changes to hospital-quality HVAC systems, ultraviolet light filtration for cleaning, and thermal scanners in lobbies. For the time being, many landlords are using mechanical systems to ensure high-quality air filtration, or installing new filters to ensure that air is being replenished with fresh air. Another option is providing free-standing filters around the office place. Zero-touch solutions will require retrofitting, and that will keep contractors busy for the foreseeable future. Looking ahead, office developers may install smart window shades activated by sun technology and more lighting that uses sensory detection.

These changes will add costs. According to some property managers, even the additional cleaning of lobbies, office space, and bathrooms adds between 3 and 5 cents per square foot to operating expenses.

Any way you look at it, a full return to the workplace will require significant changes to ensure a safe yet collaborative environment. While many of these changes will take time, real estate developers will turn to smart technology to meet the needs of their tenants.

Questions about strategic planning, tax services, or other real estate and construction issues? Our real estate accountants can help. Contact Eric Olsen at (214) 635-2538.

Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.

Topics: Real Estate, Office Design