Commercial real estate and the transportation sector have both been greatly impacted by COVID-19 and the related stay-at-home orders that were implemented around the country. Virtually overnight, many office properties were temporarily closed or mostly vacated, with tenants transitioning to teleworking. The COVID-19 pandemic has many tenants rethinking the nature of work, with competing considerations creating tension: the need to allow for more space for each worker in the office (to better accommodate social distancing) and the possibility of incorporating more remote work into a long-term occupancy strategy.
- Managers of urban office properties are concerned that over the coming year their assets will be subject to a variety of transportation challenges, such as decreased accessibility from public transit, increased demand for on-site parking, increased demand for on-site bicycle-related amenities, and increased traffic around their sites in urban areas.
- Managers of office properties in suburban and exurban locations are not as concerned as their urban counterparts about transportation challenges over the coming year.
- Managers of urban properties are concerned about both an increase in telework as well as reduced occupancy and rental rates, suggesting they believe an increase in telework will place downward pressure on asset performance.
- Managers of properties in suburban and exurban locations generally do not expect occupancy or rental rates to decrease over the coming year, but they are more concerned about the possibility of decreased occupancy than decreased rental rates.
- Most property managers are uncertain about how commute patterns may change in the coming year and are currently maintaining their transportation amenities until tenants’ future needs are clearer. However, an emerging trend to watch is an increase in bicycle storage among urban properties, likely a response to concerns about the safety of mass transit.
- Opportunities exist for asset owners to better inform their tenants about transportation options through expanded individualized marketing and communication efforts.