The Changing CRE Landscape

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Working from home started as a temporary fix but has very rapidly been embraced even by companies that balked at the mention of remote work for its employees. 

Naturally, with such a big transformation underway, commercial real estate (CRE) itself has had to witness a lot of change, mostly bad. 

• With many employees working from home for the foreseeable future, big roomy office spaces are looking like unnecessary investments/costs. 
• Hybrid companies are eyeing reduced square footage, and easily-rearrangeable rooms to accommodate much lesser and inconsistent number of staff at the office.

CRE Market Values Will Go Down

With hybrid companies rarely needing to host the entire team at office anymore, they will “recalibrate” the amount of square footage they lease in their buildings.

As a result, leasing revenue will decrease, which also reduces their buildings’ market value. 

In some cases, CRE owners may need to repurpose some of the building space to use as housing/serviced apartments/hotel in locations where it would make sense. 

In some worst-case scenarios, commercial landlords may be forced to close operations and look at other models entirely to generate revenue from their assets.

CRE Brokers

Per this piece, CRE brokers may want to reach out to companies directly to see if they’re thinking about downsizing or relocating and helping them navigate the process.

The idea is to show the clients that you are current and abreast of global changes in the commercial real estate space. With that leadership, new business should not be a problem for long.