KBS Says Dallas, Austin Are Positioned for Economic Recovery

DALLAS—Even in these uncertain times, acquisitions are continuing, albeit likely with a more cautionary approach. One firm, KBS, continues to make asset management decisions with market- and asset-based insight, combined with how each market and property may be affected.

Using this knowledge, KBS determines the ideal time to acquire, sell or reposition a property, according to Gio Cordoves and Brett Merz, asset managers and senior vice presidents at KBS. Cordoves and Merz recently shared insights into what is anticipated for the Dallas and Austin office markets during next couple of months, how owners are adjusting and how offices will change post-COVID.

GlobeSt.com: What can we expect from the Dallas/Austin office market during the next several months?

Cordoves: Now that the Texas economy has begun to reopen, albeit with reduced-capacity restrictions in place, it is very likely that Dallas and Austin will experience a transitory stage as companies begin to return to offices. When something alters the business world as dramatically as COVID-19 has, it will naturally take some time to adjust and recover.

Both Austin and Dallas have a long history as strong office markets, and because of this, we believe these markets will rebound. KBS has a variety of assets in Dallas and Austin including Tower 909, Preston Commons, Domain Gateway and 515 Congress. Fundamentals for both markets were quite healthy before the COVID-19 shutdown. Since Texas was one of the first states to begin to reopen its economy in a measured and safe manner, we anticipate that these two office markets will be well positioned for economic recovery in the coming months and years.

GlobeSt.com: How are property owners addressing the current COVID-19 environment?

Merz: Although COVID-19 has affected virtually every commercial property in the world, each asset is being impacted differently, depending on the market in which it is located. This is always the case with real estate, whether in good times or during a crisis, because it is such a local industry. At KBS, we try to take a hyper-local approach to all of our assets and Dallas and Austin are each unique, therefore property owners in each market must address the pandemic in a way that makes sense for them.

The new normal for KBS will include trying to ensure that our buildings are safe for tenants, building operators and visitors, and that anyone who enters these buildings feels comfortable doing so from a health perspective. We are adhering to all federal, state and local health directives to ensure we are doing our part in limiting the spread of this virus.

We are also evaluating each asset on a case-by-case basis to determine the best course of action and then instituting new policies, procedures and features that allow our properties to comply with social-distancing mandates while still providing the high level of products and services our tenants have come to expect. For example, we are looking at possibly adding items such as touchless buttons, antibacterial coating of high-touch areas, automatic doors and other tech features that can limit exposure to illness in the future.

GlobeSt.com: How will offices change post COVID-19? What are popular amenities and how may these evolve?

Cordoves: While it is safe to assume that office will change post COVID-19, this sector is used to adapting to change. Consider how much office buildings have transformed in the last decade, moving from cubicle layouts and enclosed offices to open floor plans with lots of collaborative space and common areas. The biggest impact will be in innovation within the office sector to structure workspaces to limit the spread of the illness to provide safe, aesthetically pleasing spaces that still provide the collaboration and comradery that tenants want.

It stands to reason that office design and amenities will change, including more barriers between workers, layouts that increase space between workstations, conference rooms and shared amenities like fitness centers that promote social distancing between people.

A major draw for companies and their employees has been office space that incorporates outdoor community areas and workspaces. This includes things like expansive patios or rooftop gathering areas that are equipped with Wi-Fi capabilities. A great example of this trend coming to life is KBS’ Preston Commons office property in Dallas, which is undergoing a repositioning that will include outdoor work areas that provide a variety of different types of workspaces, collaboration areas and outdoor kitchen areas, an indoor/outdoor coffee bar, among others.

The main concept is that employees can work from anywhere on the property and aren’t tied to their desks, which will be even more attractive as we start to return to the office.