Nothing lasts forever. That’s one of the most comforting things during these hard times. However, a pandemic can cause consequences that can be felt for months or even years in some cases.
The impact of the current pandemic on the commercial real estate industry has been highly debated for quite a long time, especially in terms of what effects it will have on office space. The question of how deeply the CRE industry will be affected by the pandemic remains open to this day.
We don’t know what the future holds, but experience allows us to predict and adapt to post-crisis innovation.
Taking the digital leap
Before the pandemic occurred, the CRE industry was slowly but surely moving towards the digitalization of processes, but when COVID-19 happened the industry was forced to adapt, and it had to be fast.
When amenities spaces are closed for months and months, creating a differentiated experience has to involve digital products. Digital-first products and services may include on-demand delivery, virtual communities, contactless access, and similar. These digital offerings play a crucial role in creating loyalty and new revenue streams while meeting the needs of tenants and end-users.
Rental costs will become more affordable
Innovation ultimately means that commercial real estate costs will be more affordable. Many people are still working from their homes, and cost optimization will encourage offices to be full of vibrant downtown spaces. If we put the economy and the final customer first, rewards will eventually come. Post-crisis innovation should focus on cost while maintaining a high level of quality.
Everything will be done online
This was the most expected outcome. This crisis has pushed owners to adopt as many online solutions as possible, from purchasing services to paying rent. But this is not a bad thing at all. If implemented correctly, this can lower the cost of payroll.
Resident experience will be put in focus
Commercial real estate leaders should really rethink what they offer to their tenants. From connectivity to safety protocols, everything needs to be considered for a deeper understanding of the tenant experience.
Technology has a central spot in personalizing the experiences for tenants, and it can offer leaders much-needed information on what the expectations are and how to achieve and exceed them.
More efficiency in utilizing office space
The commercial real estate industry has to become savvier in terms of utilizing space and using technology while maintaining social and human relationships in the process.
Industrial spaces are in high demand
We’ve already discussed this topic in one of our previous blogs. Industrial space is on the rise in popularity for quite some time now, especially now. The pandemic has driven the adoption of e-commerce which leads to a higher demand for industrial space.
Rethinking the future of CRE
If you haven’t already started thinking ahead, you should do it now. Strategic review processes have the goal to understand how the CRE industry will change in the (near) future. But, instead of relying on the economic and survey-driven approaches, real estate leaders and owners have to turn to futurists, psychologists, and technologists for advice.
Will tenants/employees demand larger workspaces? Will people have the fear of riding the elevator, or touching doors, or having contact with strangers? One thing is certain, and that is uncertainty. By using new methodologies and hiring creative personnel, businesses may gain new and more predictive insight.
Individual businesses’ ability to weather the storm depends on how they respond to immediate challenges in the commercial real estate industry, especially the current declines in short-term cash flow and space demand, as well as not knowing for sure will the tenants be able to pay their bills. Changed behaviors forced upon the CRE industry will in some way alter the way consumers and businesses interact and use real estate.
The critical question is – which one of these changes will stick?