Amid the ongoing pandemic, work is different during the pandemic for millions of people — and it may very well stay that way for months to come, says Graceada Partners. The Modesto, CA-based investment firm recently issued a report on the future of office space—and office markets—for the coming years.
Mapping out what December 2021 might look like, the report’s authors write, “We (hopefully) have a vaccine for coronavirus. But we’ve been through waves of sickness, months of shutdowns and slowdowns and hundreds of thousands of deaths. People have grown accustomed to working from home and having flexibility. Companies have shifted their models.
“Health and safety remain a top priority as companies prepare for any future pandemics,” they continue. “We’re back to some semblance of normalcy, but it’s no longer business as usual.”
The authors see five major trends unfolding throughout the coming year:
1. The rise of secondary markets
2. Prioritizing hybrid office models and employee health
3. WeWork to witness a resurgence
4. The growth of small businesses
5. The rise of microbusinesses
“The commercial real estate industry has witnessed many changes during the pandemic,” said Ryan Swehla, one of the two co-founders of Graceada. “We see big changes ahead for office space and we’re very interested in how people will continue to collaborate and what the future of that space will look like.”
With vast amounts of employees still working from home, secondary cities—including Sacramento, Nashville and Salt Lake City—will witness continued population growth, a trend that already began before the pandemic. Meanwhile, employers will continue to weigh the pros and cons of their office spaces — they’ll be “far more intentional,” Graceada says, potentially downsizing or moving to a newer, more open space or embracing more flexible models.
“This might be a bolder prediction, but I think the WeWork model will have a resurgence,” said Joe Muratore, Gracada’s other co-founder. “I think they’ve hit rock bottom and will be able to actually find their niche in the marketplace because of the pandemic.”
The report also forecasts that with downtown real estate being “undervalued” by previous standards, smaller businesses will invest in these locations to move up the corporate food chain. This will trigger a type of “trickle up” effect, in which microbusinesses will find more opportunities and mobility as smaller businesses gain their own traction
Pictured: Salt Lake City.
Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism.
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