Is WFH an Investment/Repurposing Opportunity? Prologis’ Report Highlights Some Data

Pandemic-related shifts in daily lives are not only commonplace, but they’re also likely to become permanent. A new study from Prologis dives deeper into this new dynamic. First, though, let’s set the table with a data point from Public Policy Institute of California: 

If given the choice next year, a plurality (42%) say their preference is to work full time outside the home/at their workplace, 24% say they would like to work full time from home/remotely, and 33% would like to have a mix.

That plurality likely means fewer humans in physical, destination-style office spaces. Prologis is fleshing out what that may look like for developers and/or those interested in repurposing their physical spaces. Some key takeaways from Prologis: 

• In the fourth quarter of 2021, the office vacancy rate jumped to 16.6%, while vacancy for logistics real estate fell to an all-time low of 3.4%. While this suggests high potential for office-to-logistics conversions, Prologis estimates that these conversions would only amount to 40-80 million square feet (MSF) over the next decade, which would be less than 1% of existing logistics real estate facilities

• The economics and regulatory resistance pose a high hurdle. Unlike certain types of retail, office properties must be demolished to serve as a usable logistics site, adding to an extended carry period, rezoning, and entitlement costs

• Logistics-specific requirements further limit what constitutes a feasible site. Customers who need warehousing space focus on proximity to transportation infrastructure while typical office use prioritizes access to a skilled workforce

Click here for more on this important topic (opportunity?).