Continuing to answer questions about the Charlottesville real estate market; this is Part III. Part I: Questions about the Charlottesville Market. Part II: 29 North Development Build Out.
Best answer is to wait and see. Second best would be to talk to several commercial real estate brokers and investors in Charlottesville, but for this, you’ve got me. A residential real estate broker in Charlottesville who reads and studies.
There is a lot of new commercial construction in Charlottesville. What’s going to happen to it in the COVID and post-COVID worlds?
- CODE building, which replaced the Charlottesville Ice Park on the Downtown Mall
- Apex Clean Energy building, next to ACAC downtown
- 3-Twenty-3, above the Glass building, where Bluegrass Grill used to be, and where there could have been micro apartments
- Willow Tree in Woolen Mills; more at the Daily Progress. AKA, the Broadway Blueprint
- The Albemarle Business Campus on 5th Street Extended.
- UVA Research Parks
So What’s Going to Happen?
No one knows; we are all guessing.
A few things I’m reading right now on this topic.
- ‘Do I Really Need This Much Office Space?’ Pandemic Emptied Buildings, But How Long?
- What do CRE lenders think of office buildings, apartments, and hotels right now?
- How Is the Pandemic Affecting Commercial Real Estate?
- Home real estate may be immune to the pandemic, but commercial properties aren’t
- In Coming Wave of Pandemic-Induced Vacancies, Some See Opportunity
“Hill: Yeah. In terms of the office buildings, I mean, it seems like everyone, and I’ll include myself [laughs] in the category of everyone, everyone has at least a friend who works in a big office building in a big city, and they’ve been told or they’re hearing that they’re going to be exiting that building altogether. I know I’ve got friends who work in Downtown Manhattan, or were, and now they’re probably not going to be.
How dire is it for, sort of, that category? I’m talking about the big cities, the 20-, 30-, 50-story office buildings. Are the dire predictions overblown or is dire a reasonable way to think about, at least, that category?
Argersinger: Well, I think you nailed it on the head when you, kind of, made it really specific to 10-, 30-, +40-story office building, skyscrapers in really, say, tier one markets like New York City, San Francisco, Chicago, what does the future look like for those kinds of offices? I think you could use the word “dire” in certain circumstances. First, if I look back, though, I look at traditional offices. I think there’s probably a lot of big, noisy headlines right now. You’ll read one survey, it might come from a homebuilder who says, oh, everyone is going to work from home, we’re building big houses where everyone wants a home office, that’s the new normal.
And you’ll read another research piece that says, actually, no, it’s really maybe 10% to 15% of employees are going to work from home, corporations think their employees are generally more productive at the office. I don’t personally, anecdotally, I miss the office a lot; I think you do as well. There’s certainly a dynamic there that’s missing. And I think the majority of people are going to go back to work to the office in some capacity and very few are going to work from home full-time. But what does that mean for all kinds of offices? So, I think for something like a suburban office building or satellite offices around certain markets, I think those offices are actually kind of intriguing, right? I think that might be the wave of the future; people going to a closer to home type of office in more of a co-sharing location on a part-time basis.
But exactly what you said earlier, what does that mean for the traditional office building in New York City or elsewhere where you had employees commute in, oftentimes over an hour, to get to that building? And all the costs associated with those buildings, which are very expensive to lease. I think there is going to be a lot of displacement. I think we probably overbuilt in a lot of places.”
Never Recover from Work from Home?
Really interesting article from The Atlantic. Read the whole thing.
“Ultimately, that might be the biggest problem of working from home in perpetuity. Workplaces are complex social ecosystems just like all other places humans inhabit, and decentralizing them can obliterate the things that make them satisfying: knowing eye contact with a co-worker when a change you’ve been begging for is finally announced. A slightly-too-long lunch break with your desk neighbor because your boss is in meetings all day. Giving a presentation to your peers and watching them receive it well. Figuring out whom you can rely on, and whom you can’t. “There’s so much unspoken that you absorb as an employee,” Peditto said. “You don’t get that right now with just a set of scripted meetings.” At home, though, you probably get better coffee.”