Everyone was impacted. Moving forward from the Pandemic, everything has forever changed for the office, flex, retail, warehouse, and industrial business models. Millions of businesses were temporarily closed or quickly evolved into virtual work-from-home models. Everyone jumped on Zoom, and the Zoom Meeting Software Application was overwhelmed when the world rushed to set up business meetings. Many businesses have evolved and are coping with the new norm, while others waited for everything to go back to the way things were. Jeb Blount even wrote a book called “Virtual Selling.” It quickly hit the top of the charts on Amazon. The world scrambled. Many businesses did not recover and went out of business.
What is the market outlook for Office, Retail, Flex, Warehouse, & Industrial building spaces moving forward?
One of the most affected sectors in commercial real estate is the office and retail space. However, that does not mean that this commercial space is gone, forever. Change happens.
In an interview with Associate Reporter, Kevin Stankiewicz, Bob Sulentic the CEO of CBRE stated, “You’ll see a hybrid scenario. We think 80%-plus of that occupancy, if not more, will come back.”
How did the companies survive the aftermath of the downturn in the commercial real estate market? People became conscious of the need for commercial retail space, as well as their health and safety. Thus, downsizing the office space into a safer work environment and smaller footprint became the new norm henceforth. Businesses at first stayed away from the multi-story buildings with elevators opting for single-story multi-tenant complexes.
Businesses are Reducing Office and Retail Space to a smaller, remote friendly, safer work environment
- People are social and want to be around others in a safe office and retail environment.
- Remote work is more productive in some cases. Mixing the two, working in the office and remotely, can be highly productive and increase performance.
- People do not want to get into confined spaces like an elevator when viruses are present.
- People do not want to touch things others have held, such as doorknobs, elevator buttons, or light switches.
- Single-story and two-story multi-tenant offices tend to be preferred when it comes to reducing the footprint of an office or retail space (people like to use the stairs).
- Parking just outside an office or retail space with the ease of being able to walk straight in through only 1-2 doors is strongly desired.
JW Management and many other commercial real estate companies anticipate that there is a strong demand for leasing office, flex, warehouse, and industrial space. Single-story office and warehouse complexes are the high-demand spaces. As people moved out of high-rise properties with elevators and germs. Office spaces with flexible buildout options ranging from 1,500-10,000 square feet are extremely marketable. People just want to minimize contact with others outside their businesses.
A tsunami of new businesses hit both the Residential and Commercial Dallas, Arlington & Fort Worth markets for leasing and rental space. Bigger companies picked up and moved in from California, New York, and New Jersey as more tech companies opted to move their operations to Texas. The lower cost of living as well as more favorable tax laws was a huge incentive. Companies like Tesla, McKesson, Oracle, Charles Schwab, and Hewlett-Packard Enterprise are just a few of the businesses that recently moved to Texas.
Selecting the Wrong Office, Flex, or Warehouse Space will Negatively Affect your Business
When relocating, if you opt for the wrong office space, your business will regretfully be affected. It’s important to look for the perfect location for your office and team. When leasing a space, it’s important to make an ideal choice.
3 Factors to Consider when Downsizing or Selecting a New Office Space
In mid-2020, when the pandemic heightened, many companies were forced to reduce their workforce; some filed bankruptcy and many companies switched to a work-from-home setting, which meant their offices were oversized.
Listed below are three factors to consider when choosing an office or combination office, flex warehouse.
Property, Design, Safety, & Layout. Is the office or warehouse property conducive for running your business?
According to extensive research, multiple factors influence an individual’s productivity.
Elevators influence an individual’s productivity. The COVID safety protocol limited elevator capacity to 50%. Think of waiting in line on an elevator where only 3 people can ride. The waiting time will take 3 to 5 times longer than normal, plus a higher chance of arriving to work late. For the safety of office workers, elevator experts suggest that it’s better to stay in your corner and face the wall. Another practical piece of advice is to bring a small pointer for pushing buttons. Or better yet, lease a space that is a single-story building. Unfortunately, this won’t be the last time we have a virus disrupting our daily routines.
Other factors to consider in layout design and safety include:
- If we have another deadly virus, do you feel comfortable standing in an elevator with other people?
- Is the building a multi-story with elevators or a single-story multi-tenant complex?
- Is the air quality and ventilation system adequate?
- Do you like the look and feel of the office design?
- Are both artificial and natural lighting important to your staff?
- Is there plenty of outdoor “Green Space”? Is it important?
- Are you able to take a walk during lunch to get some exercise and clear your head?
- Does the property management company respond promptly to a tenant’s request?
Moving forward, it is important that your team can be productive at all times when in the office. Therefore, it’s better to look at the property’s design, safety, and layout to evaluate if they are best for the eight factors above. Spend time to make the right choice; choosing your office space is like picking out your next home. You will almost spend as much time at work as you do in your own home.
Office Location- How convenient is going to the office? How easy will it be to drive from the office to meet clients?
Location, Location, Location is very crucial when selecting an office, flex, industrial, or warehouse space. When selecting your office space, location is the second most important factor. If your workplace is located in the middle of nowhere — it will give your employees and or customers a hard time driving into the office. If your business has a service team that drives out to your customer’s whereabouts, it can make or break your capability to earn and compete.
A conveniently accessible location is extremely important to any company’s success – Effortlessly getting to the office is vital so that your employees can come on time, feel good, and ready to complete their tasks on the to-do lists.
Stop and think about traffic patterns as well as alternative routes to the office if a big highway construction project takes place. What about parking? Is there a lot of parking spaces as well – both factors are pressing concerns for employees. Not only can elevators, traffic, and parking make them late, but they can also bring stress at the onset of the day.
Office space locations that are within reach by private and public transport, or situated within a business district, may help your business model depending on the geographic location of the business. Office locations close to necessities like restaurants, pharmacies, coffee shops, and hotels. Entertainment Districts such as the Arlington Entertainment District featuring Texas Live!, the Dallas Cowboys Football stadium, Texas Rangers Baseball stadium or concert venues will boost employee morale by having local fun events.
Am I paying a reasonable lease rate for the office space I am interested in?
You have found the perfect commercial space… But is the leasing price correct for the location and marketplace? Does the rental price match the facilities included and location?
Location greatly influences the leasing price of any commercial space. Discovering the balance between location and your budget is critical for your business. You want to think about the cost of office space since it will affect your business’ net income. Your business could end up with the commitment of a high lease rate and a low value for the space. It is essential to check if the landlord is ready to work with you to make some simple improvements to the space if needed. Will the landlord be your general contractor if more complex changes to the space are needed? If the landlord has their sub-contractors and can handle the buildout, it will be simpler and more cost-effective.
Triple net (NNN) leases are normal in the industry as a passthrough to the tenant some of the property cost. You need to assess that there also might be associated dues, parking charges, maintenance fees, or other extra fees besides your monthly lease. Take the time to study the lease and analyze the total cost of ownership.
Spend the time to do research and site visits to find your ideal office, flex, industrial, or warehouse space. No one wants a poorly maintained office with a leaky roof that you got a good deal on – employees would only be stressed out and ineffective. A good office or combined office-warehouse space can make create a good mood for the workers and boost productivity levels, significantly impacting your company’s success.
Craig Wasilchak is the COO of JW Management Company is a Family-owned & operated Commercial Property Management & Leasing in the Dallas Fort Worth Metroplex. Craig is also an active member of the Entrepreneurs’ Organization, as he is the owner of a business earning over $1M in annual sales.
JW Management Company owns and operates multiple properties throughout the DFW Metroplex