by Brianna Crandall — December 4, 2020 — Key findings have just been released concerning evolving tenant priorities and landlord strategies from the first in a series of nationwide commercial real estate COVID-19 impact studies commissioned by the Building Owners and Managers Association (BOMA) International, underwritten by global real estate software company Yardi, and developed by real estate research and advisory services firm Brightline Strategies.
Fielded among 3,010 office space decision-makers and high-level influencers from across the country, the BOMA International COVID-19 Commercial Real Estate Impact Study assessed the latest in tenant sentiments relating to the pandemic as well as its impacts on their businesses, attitudes towards the physical work environment and office space decisions going forward.
According to BOMA, the findings not only provide a clear indication of the pandemic’s broader transformational effects on the office sector, but they also enable owners and operators to model the financial and operational implications thereof and proactively implement measures to mitigate risk, .
Henry H. Chamberlain, APR, FASAE, CAE, president and COO of BOMA International, remarked:
While COVID-19 continues to be a large, disruptive force across the commercial real estate industry and its tenancy, the findings demonstrate the perceived value of office environments as a key ingredient for business success remains strong. While study results indicate high probabilities around changes in size, use and design of office space going forward, we have also seen a significant rebound in the utility of physical work environments since the onset of the pandemic, with 74% of all study respondents affirming that in-person offices are operationally vital to their businesses, long-term growth and future success.
Key findings from the study include:
- 65% of commercial office decision-makers continue to see significant value in on-site business operations, particularly as they relate to the “three Cs”: collaboration, coaching and culture.
- The economic headwinds on office tenants are far reaching, with 33% of respondents saying they have experienced at least a 25% revenue decline since the onset of the pandemic and an additional 27% saying they could experience a similar or greater decline by EOY 2020.
- 61% of all respondents report they will reassess their space needs with 43% seeking to reduce the size of their office square footage, 24% maintaining their current footprint, 9% increasing their size and the remainder being unsure.
- 78% approve of the response their current property owner or operator has implemented during COVID-19, and 77% are confident they understand how to reduce and manage risk in their physical office.
- 47% of all tenants say their landlord’s coronavirus response exclusively has made them more likely to renew, the result of proactive communications and a renewed focus on safety and security. Almost half of tenant decision-makers (46%) are seeing more value in personal relationships with their property management teams.
Additional findings explore the implications of COVID-19 on rent payments, space needs and utilization, renewal and relocation likelihoods, confidence in the safety of office spaces, and return-to-work planning.
Robert Teel, vice president of Global Solutions at Yardi, stated:
Our collective charge was to help owners and operators better understand, and proactively address, emerging industry trends and shifts in workplace priorities resulting from COVID-19, as well as how market attitudes towards the physical work environment are changing and what issues, behaviors and perceptions are driving them. Such insights are critical for owners and operators to get ahead of the COVID-19 impact curve.
The study was fielded from September 1 through October 31, 2020, among 3,010 office space decision-makers and high-level influencers from across the country with respondent oversampling in the top 20 U.S. markets. The data was then segmented and analyzed by industry, company size and stage of growth, office square footage, rent rate, renewal date, asset class, location, tenant priorities and workplace preferences, as well as other demographic and psychographic occupier characteristics.
Michael Broder, CEO of Brightline Strategies, pointed out:
Understanding how tenant priorities and preferences have changed as a result of COVID-19, to what extent operational models and mindsets have shifted in response to the pandemic and what landlords can do to support the “new normal” are key baselines for driving sector resilience. Isolating the factors which will drive office space decisions going forward not only provides owners and operators the data models to forecast future portfolio performance, but also the actionable insight to mitigate downstream risk.
The study’s Executive Summary is available on the BOMA International website. To request a full copy of the report, contact Brightline Strategies.
Public webinars
BOMA International, Yardi and Brightline Strategies will be hosting public webinars the week of December 14 to discuss in detail the key findings from the COVID-19 Commercial Real Estate Impact Study. Visit the FMLink Calendar of Events for FM Professionals webpage for links to register now for any of these upcoming webinars on December 15, 16 or 17, 2020.
