Will Teleworking Change the Future of the Office?

Originally published in NAIOP's Summer 2020 Issue By Shawn Moura, Ph.D., Trey Barrineau

The COVID-19 pandemic might not have a massive economic effect on the office sector, but it could spark big new ideas on the use of space.

The office sector appears to be less vulnerable to disruptions associated with the coronavirus pandemic than retail or hospitality, but it’s not entirely immune to an economic downturn — or the acceleration of changes in the ways people have been working  during the crisis.

Mandatory closures and other social distancing measures have taken a toll on firms that are closely tied to the consumer economy, such as the British airline Flybe, which went bankrupt in March after travel bookings plummeted in the wake of the coronavirus pandemic. Businesses that cannot conduct most of their business remotely are also in peril. On the other hand, many companies have learned that they can run their operations without anyone physically in the office, a trend that has the potential to depress demand for traditional office leases.

“High-priced office space, and new construction in particular, is going to see a hit,” said Anirban Basu, CEO of Baltimore-based economic consulting firm the Sage Policy Group, during a recent webinar with NAIOP Maryland. “People are going to be thinking about what kinds of commitments they’re going to make, and cash is king right now. If you’re trying to preserve cash, that doesn’t take you into A-plus office space necessarily. And if you do use A-plus office space, you’ll probably try to rent less of it. You’ll have more people telework if possible.”

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