Future Design of Office Space May Be Dictated by Covid19

Future Design of Office Space May Be Dictated by Covid19

 

Future design of office space may be dictated by Covid19.  FastCompany is the world’s top progressive business media brand. In an article appearing on April 19, 2021, Clive Wilkinson Architects (CWA) declared “the open office is dead”. CWA is a longtime designer of large offices for Google, Microsoft, and the advertising firm TBWA\Chait\Day. The pandemic is forcing companies to “rethink how their offices function and the way people are going to feel coming back into the workplace after working from home for over a year.” After surveying its clients, CWA created a 12-piece workplace kit of parts that illustrates the different types of spaces most office will need in the future. Three of the biggest changes are discussed below.

 

 

The Library is a “collaborative, unassigned working space that combines large working tables, individual nooks, and cushy chairs for quiet focus.”

 

 

 

 

 

 

The Plaza is “a place you can go and fill up your cup of coffee and run into a colleague or meet someone there and have those spontaneous encounters that you really can’t have virtually.”

 

 

 

 

 

 

“The Avenue reconfigures the typical straightaway office hallway to have nooks, seating, and bar-like spaces where passing colleagues can stop and chat without getting in the way.”

 

 

 

 

 

 

As reported in Costar, the world’s leading provider of CRE data  Your Future Office Could Have Privacy Tents, Portable Nooks and ‘Zoom Rooms,  “Some workers coming back to the office at least some of the time could be greeted by work tents, so-called Zoom rooms and plexiglass screens. Other staff could have in-office phone booths, respite rooms to reduce stress and portable nooks. There are even lots of easels and sensors that can track every worker’s movement to gauge use of desks and common space.”

 

 

Prominent furniture companies including, Knoll, Steelcase and Herman Miller are redesigning products to use at home, and in the office where the focus is on workplace safety. One of the results of the pandemic is that many companies are signing shorter lease deals of 3- to 5- years duration as compared to 10- years before. In this environment any furniture that is purchased needs to be adaptable to future changes in the work space.

 

 

About Cogent Realty Advisors, Inc.

Cogent Realty Advisors is an independent and licensed no fee Realtor with 20 years of experience representing businesses that lease NYC office space. We offer solutions for office Tenants seeking stability and value in uncertain times. For information phone Mitchell Waldman at (212) 509-4049.

#FutureDesignOfficeSpace

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Manhattan Office Rental Market Report, Q1 2021

Manhattan Office Rental Market Report, Q1 2021 

Manhattan Office Rental Market Report, Q1 2021. A year has past since the pandemic began and its dramatic impact on the office market is apparent. The closure of essential businesses contributed to a migration of residents away from the city. Office occupancy in New York is now hovering around 20%, among the lowest in the nation. Many companies learned to operate virtually and their work-from-home strategy proved to be productive and cost-effective.

Commercial real estate owners and private employers are optimistic that the deployment of Covid 19 vaccines will encourage more workers to return to the office voluntarily. In anticipation of this trend transportation providers, buildings and office occupiers themselves have implemented sanitary protocols to minimize exposure to the virus. In an effort to reduce workplace headcounts many companies are using a hybrid work model that divides an employees’ work week between the office and home. It is likely that that the long-term impact of this model will result in an overall reduced demand for space.

 

 

Remote Work Is Here to Stay. Manhattan May Never Be the Same.

 

 

Growing Number of Companies Plan to Shrink Office Space, Survey Finds

 

 

Construction at the 2.85M SF Spiral at 66 Hudson Boulevard in Hudson Yards, Manhattan

There are more than 21 million-SF of office development projects under construction at this time. Additionally, well capitalized owners of existing buildings are undertaking expensive repositioning (renovations) of certain assets to attract new Tenants. Although vacancy levels will be elevated in the coming years, developers are optimistic that future leasing activity will occur in the newest and highest quality buildings.

The Rudin Family to Reposition 3 Times Square

 

 

 

 

 

In the current Tenant-friendly environment asking rents are being discounted and incentives like rent abatements are increasing. Many Landlords are offering more flexible terms with shorter duration leases.

Office landlords offer discounts to lock in leases

 

 

Costar’s Analysis of the Manhattan Office Rental Market

CoStar is the world leader in commercial real estate information and has the most comprehensive database of real estate data throughout the US, Canada, UK, France, Germany and Spain.

 

Key Costar Manhattan Office Indicators:

• Vacancy Rate:  11.3% ↑
• Market Rent: $57.52* ↓ (The rental income that a property would most probably command in the open market.  This is the weighted average across all Manhattan office buildings.)
• Under Construction: 21,889,096 SF
• Total Rentable Building Area: 949,560,537 SF

Projections

The CRE Brokerage community is projecting Effective Rents* may be reduced 15%-20% from the peak recorded in 2019. This is consistent with the rent adjustments that occurred after 9/11. Substantial rent discounts may occur in lower quality Class B and C buildings. Trophy and Class A buildings that currently have a minimal amount of vacancy and a stable Tenant roster are unlikely to offer significant discounts on their rent.

*Effective Rents: The average rent paid over the term by a tenant adjusted downward for concessions paid for by the landlord (such as free rent, moving expenses, or other allowances), and upward for costs that are the responsibility of the tenant (such as operating expense pass through).

Office occupiers that are flexible in regards to their lease term and space design will secure the deepest rental discount with a Sublease.  Refer to our recent report Sublease Risk & Rewards in 2020.

 

Vacant sublet space in New York’s office market is up 91% since mid-2019

 

 

About Cogent Realty Advisors, Inc.

Cogent Realty Advisors is an independent and licensed no fee Realtor with 20 years of experience representing businesses that lease NYC office space. We offer solutions for office Tenants seeking stability and value in uncertain times. For information phone Mitchell Waldman at (212) 509-4049.

#ManhattanOfficeQ12021

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