2 min read April 2021 — Veritas Real Estate provides clients with expertise across all aspects of commercial real estate. The company has established partnerships with its tenants & clients in the commercial office, industrial, retail, restaurant, and medical sectors. In an interview with Invest:, Principal Managing Partner Rick Schwartz discussed the lessons learned from the pandemic, trends in demand and his outlook for the industry.
What have been the greatest lessons learned from the past year?
The greatest lesson has been the reinforcement of our core practices. There was a lot of uncertainty and it was important to listen and be open-minded. Different people had a different impact. I want people to know we can work together. We were transparent and accommodating and worked with our tenants to give them all possible options, and that worked well to achieve mutual success.
Where does demand for medical office space and professional office space stand compared to pre-pandemic levels?
I think demand is starting to pick up. There is still ambiguity and uncertainty in the very large corporate sector because the main concern is not only about getting people back to the office, but about potential liability and the proper way to do it. Footprints may be changing, but footprints changed five years ago when we had this thing called collaborative office space, in which everything was open — there was no assigned workspace and people picked a different location to operate from every day. After the pandemic and the home office experience, I believe people want flexibility to work from home, which many always had, but they also want to be able to go into the office. Offices might need 80% of existing space and may incorporate some flex (or hotel-like) seating options. Some people may try to downsize, particularly CFOs who focus solely on financial results with less emphasis on culture, collaboration, and talent acquisition/management. However, I don’t see the office going away; it will be more of a reconfiguration. One of the biggest challenges is companies who are unable to make a decision on what they want to do (some of which is due to corporate guidelines and mandates) as we make it a priority to take care of existing tenants’ needs and balance that with offering what we have as available.
There is also culture to consider. As a member of the management team for a very large global organization all we have talked about is culture, collaboration and attracting the best talent. Unless you have people together and foster a collaborative and interactive environment, it is difficult to attract the best talent and develop it so that employees can learn, grow and achieve both personal objectives and be an effective contributor in building the future of the organization.
I think many short-term decisions are being driven statistically. But over the next couple years they will gradually start to become only a portion of the decision-making process with greater emphasis once again placed on areas to not only retain but attract the best talent.
What does travel look like for you this year?
Personal travel is almost coming back to normal. I think business travel will change and it will take longer for it to recover. Local travel will also make a comeback. People are always looking for a competitive edge, and while you may not have your corporate retreat where you bring a hundred people to one location, I think people will go out and have initial meetings. The ongoing relationship meetings and smaller meetings to gain new business and foster relationships are going to be the first to come back. Video calls are nothing new, people had just not figured out how to do it before the pandemic.
What is your outlook for the real estate industry for the near term?
Some companies will still be figuring things out and making shorter-term decisions in the office sector over the next year. I think it will take a little bit more time to figure out how they want to operate longer-term, particularly in certain sectors where people may be able to work remotely, but there can be challenges with management, oversight, and on-boarding (particularly if there is a high turnover ratio). Some pricing is a bit softer, for example hospitality, and some is expensive, such as logistics and Industrial. I am not sure there are distressed deals in the office sector, though some people think it is a distressed market. You need to adapt to the market, and sometimes there are more concessions to be made to help one another succeed. I think people crave physical separation in their life, and there are no boundaries between home and remote work. People want to get out, and they want interaction with others. It is human nature and now highlighted due to experiencing pandemic fatigue.
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