Bookmarks: 5 Interesting Articles That May Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. I welcome your comments on these articles.

1. Zoom Towns

Let’s start with one assumption. Most Americans work in jobs that will require them to eventually return to the office or some sort of physical location. Many are working on location now because they are “essential” (healthcare workers and firefighters) or because they have some type of service function associated with their job (custodial, delivery or security). Cushman & Wakefield CEO Brett White said recently in Fast Company that 90% of office using workers will eventually be….back in the office.

However, a small segment of the workforce is uniquely situated to work remotely in the emerging “dynamic workplace” most of the time. For those knowledge workers who (a) have control of their schedules and (b) are usually highly compensated, an interesting new trend is developing: Zoom Towns. These are small, pretty locals that suddenly have a pep in their step. And the a torrent of inbound knowledge workers, high powered consultants, lawyers, technologist and other experts are discovering remote locations - almost en mass.

These Zoom Towns are burgeoning bucolic locations that were previously seen as too remote for many in the prime of their careers. Most viewed them as vacation locals before Covid. Examples include Lake Tahoe, the Hamptons, Bend, Oregon and Butte, Montana. Forbes reports these towns as some of the tops in terms of Zillow traffic.

2. Despite a shift to work from home, the office market will recover

Despite a shift to work from home, the office market will recover

An estimated 10% of workers are expected to work from home long-term even after the coronavirus pandemic, compared to only 5% before the pandemic. The shift to remote work is expected to have long-lasting impacts on office usage, but experts say there’s still hope. 

Economic and population growth in the next five years are forecasted to expand the office market in the U.S. and make up for pandemic-related losses by 2025, according to analysts at Cushman & Wakefield, a Chicago-based commercial real estate services company. 

“Expect the office market to make a full recovery despite these headwinds. And that’s really the result of our analysis, not something we just engineered,” said Rebecca Rockey, Cushman & Wakefield’s global head of forecasting and co-author of the study. 

3. Broker's Bet on Herself Pays Off in Las Vegas

At the end of last year, just as the first cases of a novel coronavirus surfaced in China, Las Vegas broker Natalie Wainwright gambled that it was the right time to leave the comfort of a global real estate services company to start up a new division at a boutique firm.

Just as Wainwright was ramping up at her new job as vice president and beginning to build the office tenant rep division at Logic Commercial Real Estate, the World Health Organization declared the coronavirus outbreak a global pandemic. A week later, the Las Vegas Strip shut down and companies across the country emptied their offices and told employees to work from home.

"It made me nervous," Wainwright said in an interview. "I had come to Logic and needed to rebuild a business, and I had just hired someone the week before."

4. A New Work Paradigm: Rethinking Office Space

We know the office of the future will change, but to what extent? The longer the COVID work from home protocol continues, the more uncertainty there is. In March, we thought working from home would be a short-term thing, now six months later, we realize that this pandemic has transformed the way companies operate. It’s incredible how much impact remote working has had on our society.

We know ways of working will never be the same. Many jobs and many people will simply not return to the office. They will continue to work remotely with high productivity and have no desire to return to the office. The time they previously spent in their commute is happily spent with family, and they find life more “balanced.” These companies will see a reduction of working space within the office and will explore how to use space previously devoted to workers differently.

On the opposite side of the spectrum, not all work can be performed productively or successfully remotely. Not all individuals desire to work from home.

5. Fed Pushes Net Lease Cap Rates to New Lows

While the total number of net lease transactions fell 19% year-over-year in the third quarter, cap rates in the single-tenant net lease retail, office and industrial sectors reached a new all-time low in the third quarter of 2020, according to the 3rd Quarter Net Lease Research Report from The Boulder Group.

In the third quarter of 2019, the net lease sector saw 16,245 transactions trade for a total of $61.1 billion, according to The Boulder Group. In Q3 2020, 13,136 transactions trade for a total of $44 billion.

Compared to the second quarter of 2020, cap rates compressed by 19, 10 and 11 basis points respectively for retail, office and industrial. The retail sector experienced its largest cap rate decrease since 2014 as private and 1031 exchange investors aggressively sought the lower-priced assets this sector provided.

Your success blesses others. I wish you a great a hugely impactful week!