How to Transition Commercial Office Strategy During COVID-19
by McKenna Hogan, on Aug 26, 2020 8:30:00 AM
Since March of this year, commercial offices have been pushed into a confusing transition in regards to sales and marketing strategies.
With COVID-19 being the catalyst for a surge in job loss across America as well as forcing a nationwide working from home experiment, commercial office organizations are left at a standstill. As a result, this has left brokers scratching their heads and wondering where to go from here.
The answer may very well lie in digitization. Digital efforts have become a hot topic among commercial real estate professionals.
What follows is an outline of marketing tactics to help reinvent business operations and ease the transition.
First, what’s happening in the commercial office industry?
There are a few variables at play currently, all requiring different strategies.
For those locked in a lease, the head of Trepp’s Advisory Services, Lonnie Hendry states, “Before we bid farewell to the office market, we should be reminded that this property sector is resilient. It benefits from a few underlying fundamentals that give it strength during times of market disruption.”
Hendry also mentions that leases for commercial office space often range from 3, 5, to 10 years in length, plus renewal options—so a significant decline in business isn’t as likely as anticipated.
However, for commercial offices not rented out at the moment, there has been some uncertainty as to how to proceed with regular business.
The slow-down in demand and rise in vacancy rate indicates a struggling tenant-base facing uncertainty within the ongoing pandemic, states Medium.
And not to mention nearly 20 million Americans have been laid off since the start of the pandemic, with office using industries accounting for 15% of that number.
With the ongoing pandemic leaving no indication as to when, or if, commercial office space will return to normalcy, below are ways in which the commercial office industry can combat these obstacles.
Market based on CDC guidelines
As soon as working in office was rendered nonessential for many businesses, there has been discussion as to how a transition back into regular work space would be organized in the event that it became safe.
For example, LCP360 has had conversations about this circumstance and debated whether or not, if the time was right and it felt safe, our office would hold up with CDC guidelines to ensure maximum safety.
The main requirement includes social distancing by at least 6-feet, which means desks, conference rooms, social spaces, etc. would all have to adhere.
Moving furniture around and accommodating new office structures is timely, not to mention, expensive. Thanks to a few digital resources, that stress on commercial real estate can be eased.
3D floor plans are an excellent resource to leverage as marketing collateral.
Providing a birds-eye-view of office space, especially with virtual staging, can assist in the planning and coordination of future office setups.
Make floor plans even more informative by including room dimensions and even staging that meets CDC guidelines for a socially distanced office.
Interactive stacking plans
Stacking plans are real-time availability tools that allow users to search for vacant units on office campuses or high-rise buildings in the city.
Prospects can navigate through filters such as room type, price range, and even square footage. The main benefit of stacking plans is their ability to insight urgency and streamline the application process.
Virtual tours have long been considered valuable digital tools in the multifamily industry, but as coronavirus has stricken the real estate industry as a whole, virtual tours provide great value to commercial office brokers, as well.
While virtual tours may not be the end-all-be-all for moving office property, virtual tours can at least provide some insight into the discovery and research phases of commercial real estate.
What we’re looking at is a potential shift in commercial office completely, or a time that may only be temporary. But with so much up in the air, it’s wise that those in the commercial office sector consider virtual tours as tools that can be strongly leveraged during research.
Not only can some virtual tour providers help future tenants walk a space inside, they can also show exterior views, map location, images, floor plans and much more.
Take it one step further and actually take prospects on a guided tour that encourages personal connection as well as the ability to ask questions in real time.
Make lease terms more lenient
According to a global occupier survey by CBRE, up to 70% of companies expect more flexible work due to a reluctance in making long-term commitments.
This is due largely to employers allowing employees to decide whether or not they feel comfortable working in office, and allowing those who don’t to work from home.
So, although lease terms for commercial office can average the span of up to 10 years, being flexible with these requirements and allowing prospects to negotiate will be an excellent way to accommodate current needs.
In addition, lenient move-in dates will be a necessity.
With the ongoing pandemic causing much uncertainty, there may be some setbacks to both your business and clients current and future endeavors.
In the end, being flexible will not only be a safe strategy, but one that resonates well with potential prospects—and builds you a positive reputation.
Is it convenient to have a space that can adjust to safety regulations? Absolutely. Is it necessary to maintain business through the pandemic? Not at all.
Being able to redesign and redistribute an office space right now may actually come as an advantage to evolving work practices.
Considering a vast majority of offices have multiple areas and rooms for different purposes, not all spaces within one office space will adhere to safety regulations.
In fact, more businesses are actually taking work outside the office by relocating certain departments, project spaces, conference rooms, etc. to completely different buildings.
Below is a diagram of a “Hub and Spoke” model of work that promotes proximity and is currently on this rise.
As a commercial real estate professional, to have office space that accommodates to off-site and on-site work, you will have a huge advantage among competitors.
Take advantage of this opportunity by investing in additional office space that can be used as secondary locations for main headquarters—or even third and fourth locations to get a head start.
Leverage this strategy as a selling point to prospects who may not be aware of these new practices, and even propose a deal or discount for tenants that want either downsized or additional space.
Turn this transition into an opportunity
In the same survey mentioned above, 41% of senior-level global real estate executives stated the importance of the physical office decreased only slightly, while 38% stated it will remain just as important, if not more.
Commercial office space isn’t disappearing, it’s transitioning—just like the rest of the world. Commercial offices will never go away. What we know is that humans always come back together, it’s just a matter of when. But until then, developing new digital strategies will be what sets CRE leaders apart from those remaining stagnant.
Accepting these changes and leveraging them to your advantage will be the most efficient way to reinvent yourself during unprecedented times.