As the United States continues to wrestle with the various impacts of the COVID-19 pandemic, the commercial real estate market has been experiencing its own evolution. In some cases, change was already on the horizon due to the so-called retail apocalypse. But the new normal for businesses has also brought about a shift in the commercial real estate space, which is opening up opportunities for those with an innovative mindset.
Leasing Activity for Commercial Space
According to a recent report by The New York Times, roughly 115 million square feet of retail space spanning about 7,700 stores were expected to close by August of this year. Some retailers, such as Neiman Marcus and J.C. Penney, were struggling before the pandemic, but the health crisis has pushed a lot of businesses into bankruptcy.
At the same time, there is more than 172 million square feet of premium office space scheduled to come online in 2020 or 2021. And less than two-thirds of that space has been leased, which is a rate below the average.
In short, there is more commercial space available because businesses are struggling or re-examining the way they operate with remote workers. But this new normal has also opened up opportunities in the commercial real estate market.
How Commercial Spaces Are Pivoting Thanks to COVID-19
The various shifts in the market are giving businesses and property owners some interesting options to reassess their strategies. For example, Amazon plans to convert several Sears and J.C. Penney stores owned by mall operator Simon Property Group into distribution warehouses. Amazon is also working on converting the closed Lord & Taylor store in New York City into over 676,000 square feet of office space that will serve roughly 2,000 employees.
On the West Coast, a private equity firm and real estate services firm are partnering to overhaul a Hollywood entertainment complex called Hollywood & Highland. When complete, the complex, which hosts the Academy Awards, will also have close to 10,000 square feet of office space.
So, office space is still in demand even though many workers are at home. Based on recent research from JLL, more than half (58%) of surveyed workers are less than thrilled and miss the office.
What many have accepted as the new normal may only work for some businesses or industries. Sure, the technology is in place to allow certain workers to get things done from their living rooms, but companies are beginning to see the value of interaction and collaboration, which are bedrocks of success. In the end, office space will be here to stay with more of a hybrid workforce that gives companies flexibility.
Other conversion projects are on the table as well. For example, the hospitality industry is struggling, but healthcare and assisted living businesses need space. Some hotels are being converted into retirement and assisted living facilities. Finally, some commercial spaces are even being converted into interesting and accessible apartments or condos.
If your business is ready to revolutionize its commercial real estate footprint, you need a trusted partner in your corner. Caldwell Commercial’s realtors and property managers have a combined 80 years of experience helping clients throughout the Charleston, SC area with leasing & sale, development, property management, and owner representation services. Contact us today to learn more about how we can make your office space vision a reality.