To say that it's a precarious time to invest in office buildings would be an understatement. Office buildings have largely sat vacant since the start of the pandemic as companies did the cautious thing by instructing employees to work remotely.
Over the summer, many employers started firming up reopening plans in the wake of COVID-19 vaccine availability, only to then postpone those plans when the delta variant took hold. Now, companies are shifting gears once again and delaying office returns in response to the highly transmissible omicron variant. Some, in fact, are delaying those returns indefinitely, not even bothering to set a target date for bringing employees back in.
Still, some real estate investors may want to take a chance on office buildings, despite the blow the pandemic has dealt them. But if you're going to invest in office space, it pays to look out for these three key things.
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1. Built-in parking
While employees may eventually be called back to offices, many will no doubt hesitate to board public transportation while COVID-19 is still an issue. That could lead to an uptick in people driving to work -- and strong demand for parking spaces.
That's why it pays to seek out office buildings or complexes with built-in parking. These locations are more apt to appeal to tenants, because the availability of parking solves one logistical constraint on the road to a more robust office return.
2. Upgraded technology
Even once employees return to offices at a more robust pace, there's a good chance companies will uphold hybrid arrangements -- where workers do their jobs partially from home -- for a long time. But to make that happen, office buildings will need the right technology. Buildings offering better internet connectivity and dedicated spaces for remote meetings are likely to draw in more tenants than those that don't adapt to the need for hybrid setups.
3. Outdoor amenities
The pandemic has taught us to embrace the outdoors -- not just for exercise, but for everyday functions. Now, companies may look for ways to let workers do their jobs in the open air. And they may specifically seek to hold larger meetings in outdoor spaces to limit potential COVID-19 exposure (or to any other transmissible illness, for that matter). As such, office buildings with outdoor amenities, like courtyard seating and tables, could gain an edge in the near term.
Near-term but manageable risk
It stands to reason that some real estate investors want to stay far away from office buildings right now. But while office REITs, or real estate investment trusts, may pose some near-term risk, ultimately, it's clear that office buildings are not about to become obsolete.
If it weren't for recurring COVID-19 surges, many companies would already be back to business as usual in traditional office settings. And so investors who are interested in office space may really just have to ride out a few more COVID-19 waves for the sector to stabilize.
That said, the pandemic has certainly changed the way companies operate, causing a shift in the office building amenities tenants are most likely to find desirable. And so if you're going to invest in office space, be sure to keep an eye out for the above features.
