REAL ESTATE NEWS

HERE’S WHAT WE KNOW ABOUT OFFICE: DE-DENSIFYING IS IN

Published on Wednesday, January 13, 2021

The magic actually in development is trying to read the future.

 

With uncertainty surrounding when and if people will return to work, the office market has stalled.<

“The volumes that we’ve seen in past years just aren’t quite there,” Jim Dobleske, global president, Project Management, CBRE, said on CBRE’s “The Weekly Take” podcast. “However, they are starting to come back again, where clients know that those fit outs fit in with their overall business strategy.”<

Dobleske says many occupants are interested in de-densifying space in reaction to COVID. “Our project work has shifted from trying to pack as many people into a certain floor as possible to now spreading them out a little bit more,” he says. “We’re creating more conferencing areas than we had in the past.”<

Many of these rooms are being designed with COVID requirements in mind. “Firms believe that those requirements are going to stay beyond the vaccines coming out,” Dobleske says. “And so they’re building out space a little bit differently. They’re retrofitting that space differently than they have in the past. Those are some of the bigger changes that we’ve seen. And we think those changes are probably here to stick around even beyond the post COVID era.”<

For office developers to be successful in this fluid environment, it is necessary to predict what the environment will look like in three to five years.<

“If you think about 20 years ago, private offices and separation were really important for productivity, then densification was really important for efficiency,” said Ann Sperling, senior director for Trammell Crow Company. “Now, we’re seeing the pendulum swinging back where space and time to health and wellness is tied to both efficiency and productivity.”<

But a pivot in preferences caused by a pandemic is difficult to anticipate. That’s why building enough flexibility in order to be able to respond to what tenants need is crucial, according to Sperling. “That’s the magic actually in development,” she says. “It’s trying to read the future.”<

Still, Dobleske hasn’t seen a lot of significant occupiers make investments in new spaces in hub-and-spoke strategies. “A lot of these big occupiers have major campuses that they’ve already invested in,” he says. “And so they haven’t made the call as to whether or not to go out and spend that money in other locations right now to create more of that flexibility.”<

Instead, the bigger occupiers are looking to continue to utilize their space in the most efficient and effective manner, according to Dobleske.<

“There’s still a little bit of wait and see, and we just haven’t seen the big occupiers pull the trigger that fast on the really building up those remote and regional offices,” Dobleske says.<