With so many people working from home, what is the impact of the COVID-19 pandemic on commercial real estate, short-term and long-term? Will downtown Salt Lake City high-rise office buildings ever fill up again? What about large commercial buildings currently under construction?
Lew Cramer is Utah CEO, Colliers International: Clearly everyone is working through what current COVID and then post COVID (may that time come soon!) business activities will look like and what the recovery will look like. Utah and Salt Lake City are blessed to be grounded on solid economic foundations generally. Despite current business uncertainties, we are still seeing relatively stable downtown SLC office leasing situations, with some additional sublease activities increasing.
SLC is blessed with many institutional owners with long-term financial perspectives, and therefore they want to be well positioned for the expected uptick when the economy improves. The six or more planned or under construction downtown high rise buildings are very well designed, and most are spending much attention to upgrading their planned ventilation and other hygiene-sensitive services to minimize health concerns. Many tenants are telling us that they will want additional office space to allow less dense office solutions for their returning employees.
No question but that many employees miss the tangible and intangible benefits of working in an office setting, such as the “coincidental collisions” that can only occur when humans are closely interacting personally in a physical office. Netflix’s CEO Reed Hastings was quoted last week in the Wall Street Journal (Sept 8, 2020, page B5) as responding to the Journal’s question: “Have you seen benefits from people working at home?” His blunt answer: “No. I don’t see any positives. Not being able to get together in person, particularly internationally, is a pure negative. I’ve been super impressed at people’s sacrifices…If I had to guess, the five-day workweek will become four days in the office while one day is virtual from home. I’d bet that’s where a lot of companies will end up.”
Downtown Salt Lake City has boomed, and will continue to blossom because younger employees can enjoy being able to live, work and play there in a delightful setting . When they are able to more fully return to their offices, the entire downtown scene with restaurants, retail, entertainment and sports will return robustly. Similarly, with our excellent transportation, including light rail, suburbanite and downtowners can enjoy again to the vibrant retail and outdoor scene both downtown and in the suburbs that has dramatically expanded our many lifestyle options and fueled our state’s economy. It’s a mutually productive and reinforcing cycle of activity that will help all aspects of our economy to again be the envy of the nation.
Colliers International is a global commercial real estate services organization with 15,000 employees in 68 countries.