Thought Leader Presented by Colliers
How Occupiers Can Adapt to the COVID-19 Pandemic
There’s even more value in versatility as tenants adjust their approach to current team and future spatial needs.
ATLANTA & DENVER—Businesses are used to adapting to market threats and economic ups and downs, but the current pandemic creates a unique set of risks that will really test how CRE occupiers adjust. GlobeSt.com reached out to leaders of Colliers International’s occupier services division—Scott Nelson, CEO of Colliers’ global occupier services division, and Chris Zlocki, EVP and head of service excellence for Colliers’ global occupier services division—for their insights on team dynamics, spatial needs and other CRE contingencies.
“Occupiers need to be aware of how COVID-19 will impact their business continuity,” Nelson and Zlocki agreed. “Effective use of technology is the most important driver of business continuity for remote workers.”
Tech provides the platform, logistics, communication and virtual environment to conduct standard business processes and allows employees to maintain, and even increase, their productivity. Digital video platforms, such as Microsoft Teams and Zoom, allow people to connect remotely, but the right techniques must accompany the advanced tools. Colliers’ Workplace Advisory team recently published 12 Best Practices to Work Remotely, which include psychological and time-management tips.
“What works in the office won’t necessarily translate to your home office or adapted dining/war room,” they noted. “For supervisors, overcommunication in this environment is important in managing relationships and sustaining engagement levels.”
Occupiers must also be proactive with their leasing obligations and real estate portfolio strategy during these challenging times. The remote working setup, if productive, might allow tenants to forgo pending lease renewals. It behooves occupiers to maintain consistent communication with their landlords.
“In many cases, both occupiers and landlords are looking to delay any long-term commitments, given so much uncertainty, and are leaning on their relationships to help each other out and wait until things settle,” the two said.
Given the financial impact of COVID-19, occupiers may need to negotiate immediate rent abatements and/or request short-term or month-to-month extensions until assured that stay-at-home orders and shelter-in-place restrictions will be lifted. They should carefully review all lease agreements and insurance policies. The pandemic has certainly taken some steam out of the landlord market with the “blend and extend” strategy (e.g., extending a lease commitment early in exchange for a rent reduction) all of a sudden coming into play again. Colliers’ occupier services has published two articles, “COVID-19 Considerations for Occupiers” and “CRE Market Outlook and Down-Market Strategies for Occupiers During COVID-19”, which provide real estate strategy and transaction advisory recommendations, as the business climate continues to evolve.
Fallout from the coronavirus means that the coworking sector and other flexible workspace, which were all the rage the past few years, may be on the outs. The need for a secure, sanitary and less dense spatial solution may force occupiers into portfolio-wide retrofits of spaces to de-densify and design for a cleaner environment in the future.
“You should analyze your portfolio for all key transactions and projects that will be planned or executed in the next 18 to 36 months and develop contingency plans in collaboration with your business units,” they said. “Also, confirm that you are aligned with your CFO and finance organization relative to capital availability and approval processes.”
Putting your people and portfolio in the right position—a healthy place—requires a strong plan and platform. CRE occupiers seeking continuity in the age of coronavirus are finding value in versatility.