Within a few weeks after the first COVID-19 case was confirmed in Rhode Island, working from home became the norm.
Suddenly, many commutes consisted of grabbing coffee from the kitchen and finding a secluded spot to work on a laptop computer.
Work-appropriate attire need only be worn from the waist up, and even then only for video conferences with clients or colleagues. But will home offices begin to replace those in commercial buildings once the coronavirus pandemic ends?
Opinions vary among leading commercial real estate specialists in Rhode Island.
Some people who have always liked keeping home and work separate may find they are wary of returning to an office full of people, while others who’ve preferred to work at home may discover they’ve had their fill, Lefrancois noted.
“It will be hard to tell until all of this is over and we see how people’s behaviors have changed,” he said.
However, the trend never blossomed.Thomas O. Sweeney, who serves as principal and chief appraiser at Sweeney Real Estate & Appraisal in Providence and president-elect of the Rhode Island Commercial and Appraisal Board of Realtors, recalled attending a conference about 30 years ago in which experts predicted that the demand for office space was soon going to fade as technology continued to connect workers to their jobs.
“The reality is most companies have determined there is a benefit from having people all in one space because that’s how collaborations and innovation happens,” Sweeney said.
Once the public health crisis abates, offices will still be filled, he said, although he and others foresee potential changes in how companies use office space.
Changes could potentially spring from a sudden forced reliance on technologies such as Zoom and other platforms that allow for virtual meetings and project collaboration.
“Office space in particular will adapt; there might not be as much density,” Sweeney said.
The realization of what’s possible may be eye-opening to some, especially those looking to tighten overhead spending, said Donald Morash Jr., a broker and partner at Abbott Properties LLC in Warwick.
“I think people … can see what they might be able to cut out. Do they really need a 2,000-square-foot office?” he said. “I think we’re going to see some changes happen that could affect the market to some extent.”
But to what extent? Most in Rhode Island’s commercial real estate arena agree that it’s too early to say.
If large companies allow more workers to stay home and scale down their offices, that could open opportunities for small companies that previously were hard-pressed to find space at the right cost and size, Morash said.
Timing, too, may factor into whether commercial properties could see a change in use, as banks, landlords and investors anxiously wait for the economy to rev up again.
“Everybody is hoping that we get back to work, but the question then is, is it going to come back immediately, or is it going to take another 30 to 60 days to have the economy tick back up?” said Karl Sherry, a partner at Hayes & Sherry Ltd. in Providence. “As long as we can get this straightened out [in a] month or two we’ll be all right.”
But while office and retail space may be top of mind when it comes to a difference in usage, it’s doubtful that industrial space will see much change, Sweeney said, citing a pre-pandemic 5% vacancy rate.
“We were a very tight real estate market before this,” he said. “I think retail is going to shift, but the restaurants that can reopen are going to do well because there’s going to be pent-up demand.”
Still, the coronavirus hasn’t forced demand for commercial real estate in the Ocean State into total hibernation.
Although Morash’s company was in the midst of several transactions that were put on hold once the pandemic gained strength, he is still receiving requests from buyers looking for specific types of commercial property.
Lefrancois is seeing the same thing, and he added, so far there’s no real evidence that property values are declining.
“When it comes to perceived value, it’s important to understand that most investors are making their buying decisions based on anticipated future benefits that the real property will produce,” he said.