Due to the Corona virus and the transition to a remote work system, many corporate offices remain empty even as the end of the health crisis approaches, so will this have consequences for the economy?
He says magazine ” Economist” ( Economist ) in report that business owners began these days looking for ideas to re staff to offices, through provision new services different from previous spaces. Read also They made huge profits.. Who are the biggest beneficiaries of the Corona crisis? In order to achieve your financial goals, here are these tips to increase wealth You should get rid of them.. 12 obsolete financial habits Hardship for landlords and tenants’ inability to pay… Is it an opportunity to expand social housing in America?
A Manhattan skyscraper named after the Vanderbilt family revealed its intention to open a restaurant run by world-class award-winning chef Daniel Boulud, and the second headquarters of Amazon in Virginia will include an outdoor concert theater, and in London the end of the works of the building is nearing. Bishopsgate 22, which will allow pets by issuing entry permits for dogs and cats.
The magazine indicated that companies are trying to lure employees to return to the offices, at a time when developers and investors are betting on the construction of green buildings that include more facilities and amenities than before, but there is still great uncertainty hanging over the scene, will a large number of people return to work as In the previous?
Even with the great progress in distributing the vaccine, the return of employees to their offices seems very slow, and at the beginning of last May, one in 20 buildings achieved a capacity of more than 10%, while this percentage reached a third in Europe and Africa, and nearly half in Asia.
In light of the faltering return to normal life and work offices, the losses resulting from the crisis and the eviction of offices over the past period seem worrying.
And the Corona virus has increased the pace of demand for new buildings that contain more amenities than others. Across New York City, more than half of the towers now contain high-quality A-class offices, which was only 38% before the outbreak.
There is also a general trend towards environmentally friendly work spaces, where energy efficiency and air purification systems have become a necessity, and many companies have pledged to reduce polluting emissions to the environment in workplaces to zero by 2050, and the number is constantly increasing.
The fate of ancient buildings
But according to the Economist report, these changes raise many questions about the future of corporate real estate, as this shift towards high quality affects the rates of demand for old and traditional buildings, especially as remote work has reduced the demand for office space.
Indeed, there is a huge threat that the old buildings will become simply abandoned financial assets and without any value, this is troubling, especially since two-thirds of commercial property in London was built more than 20 years ago.
The company “SL Green”, which specializes in renting offices in Manhattan, has announced that rental prices for old properties have fallen by 10%, and there are fears that the companies that own these offices will be unable to find customers in the future, if they do not accelerate the reduction rent prices, improve ventilation, or provide open spaces and natural lighting.
Several companies in the United States and Europe have embarked on drastic changes to older buildings, such as converting roofs into gardens, glazing roofs, and converting commercial and office properties into apartments.
But according to the magazine, all these solutions will not hide the fact that the idea of remote work, which was popular during the Corona virus crisis, means that the demand for offices will continue to decline. Several companies have begun to consider their space needs, and many have decided to reduce the amount of property they are renting or forgo plans to rent additional premises.
Real estate company Cushman & Wakefield reports that the office space that became vacant after the Corona virus exceeds the space vacated in the 2007-2009 financial crisis by 18%.
Experts’ estimates are currently pessimistic about the future, as one out of every 5 offices in the United States will be vacant by 2022, according to Moody’s analysis, and rental prices will fall by 7.5% during the current year.
All these indicators have put the central banks in Europe and the US on alert, as relying on commercial real estate to finance loans now appears unprofitable, with potentially dire consequences for the entire financial system.
Banks appear to be exposed to many risks. The commercial real estate sector in the United States, for example, has borrowed more than $2 trillion from banks, and this represents about a fifth of loans granted by banks.
The European Central Bank, in its latest report on financial stability, warned that the return of faltering activity in this sector may hide a larger problem, and that there are risks to financial stability that the real estate field may cause, especially since many companies in recent years directed all their investments Towards the construction of commercial real estate.