Offices have sat empty for nearly a year now, and tenants are beginning to reevaluate what the future of their office might look like with design, layout and even lease terms – a topic making headlines recently.
Negotiating Leases – Are you asking the right questions?
Before the pandemic hit, the commercial real estate (CRE) market was strong and even predicted to grow. Once COVID-19 was widespread, our world changed. Tenants struggled to meet rent obligations, tenant-landlord tensions and lawsuits ensued and the market quickly dipped.
As companies continue to define their new normal, they need to make sure they’re asking the right questions when reviewing agreements moving forward. Consider the following:
- As leases come up for renewal, should tenants be asking for adjustments?
- What adjustments should be made?
- What are landlords willing to compromise on?
- Are companies realizing they don’t need as much space (or any space at all)?
- Should companies terminate their lease early or claim less space?
It’s important to consider the pros and cons, and to ensure both tenant and landlord are happy with the outcome. Lease negotiations are big conversations, and it’s important leadership is armed with the best information to take to the table.
Myth debunked: Office spaces are not headed for obsolescence.
Over the last decade, office space design has changed, ultimately shifting how we work. Open cubicle layouts evolved into office space with a collaborative nature, which has shifted to virtual connections due to the pandemic.
With a large percentage of the population working from home, the pandemic has forced many companies to reevaluate office space and ask the question, is it even needed?
Short answer: It is.
Companies are finding employees inherently long to connect with each other in person, but when they return to their workplaces, they will likely look a lot different. There will always be a need for office space. However, the amount of real estate needed for office space may shrink.
Once the lease and office space is secured, designers are faced with creating a new space with an emphasis on safety and wellness. Concepts used in the health care industry will likely be integrated into typical corporate projects, including:
- Ultraviolet germicidal irradiation (UVGI) systems to destroy germs and molds clinging to the inside of HVAC systems, ductwork or coils.
- Biophilic design or integration of indoor and outdoor spaces by bringing nature inside.
- Touchless technology including faucets, doorways, etc.
- Antibacterial surfaces, fabrics and finishes.
It will be important to give employees the flexibility and choice when beginning to return to work. Employees want to work where they feel comfortable and safe. It’s anticipated the CRE industry will shift to smaller collaborative spaces, more private workspace and an opportunity to be connected to the outdoors.
The landscape of commercial real estate is everchanging and staying up to date can be challenging. Learn more about industry insights and trends by becoming a CREW Detroit member here