The days of eerily empty offices and airplanes may be behind us, but as commercial real estate bounces back from the pandemic, everything from the way we work to the way we shop and travel is in the middle of a major readjustment, said expert panelists on the second day of Mansion Global’s Luxury Real Estate Conference on Wednesday.
“What we’ve seen in New York in particular is that the return to office progression has been very gradual,” said Peter Miscovich, managing director, strategy and innovation at JLL Work Dynamics. “As of Oct. 8, we’ve just surpassed 20% occupancy. The Delta [Covid-19 variant] surge really delayed what was anticipated to be a major return after Labor Day.”
And while some luxury retail has roared back as consumers get out of the house and flex their spending power, businesses that rely on foot traffic from office workers in traditional commercial corridors continue to suffer.
More: Residential Real Estate Returns to Earth, but Will Remain Strong
“On some parts of Madison Avenue, retail rents are down 50% from their 2015 peak,” said Jonathan Litt, founder and CIO of Land & Buildings Investment Management. “It’s a ghost town because offices have not reopened, and international travel has not come back to the city. Until we see what office use is going to look like, and see international travel come back, it’s going to be a rough go.”
Suffice it to say that while many signs are trending positive, commercial real estate has emerged from the pandemic with a far less rosy picture than what’s transpired in the realm of residential. Below, more insights from Wednesday’s panel discussions about the ongoing evolution of commercial real estate:
A discussion with consultants and experts about returning to the office as the coronavirus persists. They’ll discuss office culture and health protocols, socially distanced work set-ups and hybrid (remote and in-person) working arrangements. They will also discuss near term and long-term scenarios for in-person working.
Click to view or join live discussions at the 2021 Luxury Real Estate Conference
Offices Might Change, but They Won’t Disappear
Their return may be slower than originally anticipated, but little by little, workers are making their way back to offices.
“Yesterday at One Bryant Park we reached 40% occupancy, from a low of 5% when the pandemic started,” said Douglas Durst, chairman of the Durst Organization. “We’re seeing occupancy coming back quite strong, and expecting normalcy by the end of the year.”
Market observers predicting the death of the office, Durst added, “Don’t know what they’re talking about.”
From an investment perspective, “I think the trends are positive,” said Tammy K. Jones, founder and CEO of Basis Investment Group. “We have 35% [office] occupancy right now, and I’ve seen studies forecasting …….