A new report from the Urban Land Institute illustrates the impact the Covid-19 pandemic has had, and will continue to have, on commercial office space in the coming year. The report, titled Emerging Trends in Real Estate® 2021, discusses the impact the Covid-19 pandemic will continue to have on the business world in the U.S. in 2021.
Real estate services firm Newmark recently hosted a virtual event in which a panel of local experts discussed the report and the state of the Colorado real estate market. Here are some of the panel’s observations.
Colorado Economic Challenges
Unemployment continues to remain a challenge in Colorado along with the rest of the nation. In the first four months of last year, from January to April 2020, the state lost 343,000 jobs as a result of the pandemic, many in the leisure, tourism and hospitality sectors.
While the local economy has shown signs of improvement, local economists aren’t expecting a full recovery of employment to pre-pandemic levels to occur around the end of 2022.
Not all sectors are suffering, however. Manufacturing, especially in the aerospace industry, is doing well in Colorado while employment in the state’s professional and business services sector is increasing.
Commercial Office Outlook
The trend to work from home has had a definite impact on the commercial office space and the business real estate market in general. Offices will retain a vital role in the business mix, however, as some employees find it difficult to work from home. Offices also play an important role in company culture.
In the coming year, it’s expected that many companies will seek smaller offices as many employees will continue to work from home. However, companies will seek more square-feet per worker in their office spaces to address employee health concerns. It’s currently unclear how these trends will impact the commercial office sector.
In an article published at Mile Hi CRE, panel member Chad Brue of Brue Baukol Capital Partners said, “Many tenants are looking at this pandemic as an opportunity to rethink their space. They are hesitant to make any long-term decisions and there has definitely been a shift towards suburban and spreading out more. We have tenants that are looking for more low-rise and mid-rise buildings.”
Thomas M. Lee, executive managing director at Newmark, expects a slow first half of the year in the commercial office space, with activity picking up substantially the second half of the year as a result of pent-up demand. He believes many companies will seek high-quality, new-build office space in the coming year, which he termed a “flight to quality.”
“I’m convinced you are going to see big tech companies making big commitments to Denver,” he stated. “I think we are well positioned with all of our infrastructure for big growth in this next decade.”
Affordable Housing Challenges
Affordable housing continues to be a challenge in many parts of Colorado. This will be especially true in municipalities that resist allowing more residential housing in their communities.
Developer Chad Brue struggles with this mindset. “They want commercial, they just don’t want residential,” he said of communities trying to limit the growth of residential housing. “If you restrict supply of housing in these communities, then by definition you are increasing the price.”
“The demand to live in Colorado is not going to change,” he added. “These communities that are restricting supply are hurting their main objective, which is to gain more affordable and more obtainable housing.”
Meeting the Challenge
Miller’s Landing in Castle Rock, CO, is creating commercial office spaces that meet the evolving needs of companies. We’re currently seeking tenants for our new 150,000 square-foot multi-tenant office building under development. When completed, the building will provide versatile office space that meets modern health and safety demands in the era of Covid-19.
Rise Commercial Property Services will market the new office building. It’s the ideal location for businesses looking to up-grade to a new, more modern facility.
The office building is part of our innovative new multi-use development located in the heart of Castle Rock. Miller’s Landing features a pedestrian-friendly town center supported by a resort hotel and spa, modern office spaces, conference and meeting facilities and new residential housing options. Unlike many other developments, Miller’s Landing also features large tracts of open space and easy walking or biking access to downtown and the area’s most popular outdoor recreation park.
Castle Rock is ideally situated on the I-25 corridor in the south Denver metro area. The town offers easy access to Denver to the north and Colorado Springs to the south. It’s a popular town with well-educated professionals, many of whom would prefer to work in town.
At Miller’s Landing we’re creating a development that will bring lasting value to the community. We welcome you to join us as we build an exciting future.