Page 67 - AAGLA-JAN 2022

Member Update
Desperately Seeking Certainty: Considerations for Office Landlords and Tenants
By Linda Koffman, Michael Manzi, and James Porter – Smith Gambrell Russell
(Editor’s Note: While the topic of the office market is a bit out of our “wheelhouse” here at our apartment association and may not fully align with Wour typical content on multifamily residential properties, many of our members currently own or are interested in investing in various types of commercial properties, including office buildings. Whether you own or are interested in investing in an office building, or not, you will surely find this article of interest. Where the demand for office space goes, so goes the demand for residential rental properties to live in.)
limiting uncertainty, and this may be especially true in the real estate business. Justice Oliver Wendell Holmes said, “The longing for certainty ... is in every human mind. But
certainty is generally illusion.” And so, it was for office owners and tenants as the impact of COVID-19 began to take effect in March 2020.
Although the severity of the pandemic seems to be subsiding, it is too early to predict with any degree of accuracy the scope of changes that will emerge in commercial real estate. The changes depend on variables of human behavior that do not always reflect reasoned thinking. The decisions to be made in the near future by executives, administrators and employees will arise from a variety of causes, such as a desire to return to the community of the workplace that cannot be duplicated by videoconferencing, the desire to remain distant from urban centers, hesitancy to use crowded trains, planes, buses and elevators, and a reluctance to resume lengthy commutes. Employer mandates are also varied: some want a total return to the office, some agree to continuing working from home for now, and others are trying hybrid arrangements.
This article will discuss options office owners and tenants may need to consider in light of increased vacancies as a result of the pandemic and the uncertainty it has created and
As more workers become vaccinated and return to work, many companies are rethinking their office design and space needs. For those companies that have kept a more traditional office layout with segregated private offices, conference rooms for meetings and “break-out” rooms for eating and socializing, their existing space plan may not need significant changes. For those companies that have opted for “open concept” offices where people sit side by side in an effort to maximize space usage and encourage collaboration, they may consider whether they want to revise their space plan to provide room for social distancing and other safety measures arising from the pandemic.
For many industries, the experiment about whether work from home could be productive and not negatively impact the bottom line has been proven successful. Nonetheless, business leaders across the country are readying their workforce to return to the office on a regular basis. Despite the optimism among many office owners, brokers and company leaders, many others – including a large percentage of employees – do not necessarily want to return to the office full time. The forced lockdowns and other impacts of the pandemic have created significant changes to our behavior, lifestyles, and ideas of work, with many believing they are more productive and happy working from home.
In larger cities like New York, many companies recognize that employees with less space at home, roommates, or families
hen it comes to business, much will delve into lease provisions that may take on heightened time and money is devoted to importance going forward.
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