Coronavirus Moving To Suburbia

Still building with fewer available tenants?

I had no idea that Facebook and Twitter would tell their employees they could work from home forever.

In one of my early post about the Coronavirus, I mentioned one of the economic impacts of the pandemic would be a hit to commercial real estate. If even 25% of office workers permanently work from home once the pandemic ends, that would be 25% less office space businesses would need to lease.

Ouch.

https://www.usatoday.com/story/tech/2020/05/22/coronavirus-remote-work-post-pandemic/5242420002/

My wife's company still has their office employees except a skeleton crew working from home and there are no plans on calling them back into the office. 

Once companies' leases are up, I imagine a lot of downsizing of office space will be going on.

I had also imagined that some people may move out of the cities if they didn't have to be there. 

CNBC reported that said 13,000 apartments stood empty in Manhattan - twice the number from last year. 

Observer reported that Jennifer Lawrence sold her Upper Eastside Manhattan penthouse apartment. She bought it for $15.6 million in 2016 and just sold it for $9.99 million. Ouch.

https://observer.com/2020/08/jennifer-lawrence-sells-upper-east-side-new-york-penthouse-apartment-at-loss/

I think about Downtown Los Angeles which has been going through a major renovation/gentrification of its old hotels and warehouses and turning them into expensive lofts for young professionals. New restaurants, bars, art galleries and the like were popping up. Does this mean it was all for naught? If you are not working in downtown, why would you move there? Even though it has improved over the last twenty years, it still smells, homeless wander the streets at all times of the day and night, and the only green space is in Grand Park which is far (a mile) from most of the new development.

Mall-anchoring department stores are closing, movie theaters (huge commercial property renters) are in serious financial danger, and concerts and sporting events will undoubtedly be different for years to come.

And while summer whether allows for restaurants to serve diners outside, what is going to happen come fall and winter if there is still no vaccine? Living in LA, the seasons don't matter much (sun, sun, and maybe a sprinkle, then more sun), but I imagine in New York and South Dakota, outdoor dining will probably lose its allure in winter.

Ouch.

To sum up, the things that drew people to the city are changing.

While all of this is scary news, it is a fascinating time to see the world changing before our eyes. 

Can you imagine what the world will be like next summer?

Take care and be safe.

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