In-person experiences won’t be replaced by Zoom in a post-covid world
More virtual seminars than I could count. So many people pontificating about the “future of office space in a post-COVID world” or “the changing face of retail”, “real estate’s new normal”, “permanent real estate paradigm shift”, and my personal favorite: “will we ever travel for business again?”
These new themes and topics are still being discussed ad-nauseum, and hit the real estate speaking circuit almost as fast COVID-19 reared its ugly head in our own neighborhoods. Some were thoughtfully analyzed and have certainly drawn interest from many of us working in real estate. But many, as you can imagine, were headline grabbing click bait meant to capture eyeballs. Regardless, there will most certainly be changes felt across the real estate industry. To a large extent, some of the known fallout will take several years to recover (e.g., retail) and some is still too early to know (e.g., CBD office space).
What I do know is that there will certainly be winners and losers but there will be no immediate great paradigm shift. Only recovery (some fast, some slow), adaptive re-use where opportunities present themselves, and lessons learned, will ultimately create new opportunities.
A great piece of advice I received from a mentor of mine early in my career is that any time someone starts talking about a “permanent paradigm shift” in commercial real estate you need to run the other way. Change is inevitable and real estate has seen its fair share, but the fundamentals will not change. Evaluating risk, underwriting performance, location, location, location, demographics, capital stack…the list goes on. While we may see some change, the major food groups are still here to stay.
Humans are hard wired to seek connections and human-to-human contact that can only come from in-person interactions. Our literal neurological and physiological makeup depends on it. Entire branches of science are dedicated to studying the impact of brain chemistry and the effect that isolation, intimacy, and basic human interactions (or lack thereof) have on a person’s well-being.
And I’m sorry hermit apologists, but the science is clear. Humans crave in-person human interaction. Deals get done faster as eye contact, hand gestures, general body language, and tone are analyzed in a fraction of a second by our highly advanced brains to help make immensely important decisions that simply cannot be accomplished over a Zoom call. And for those of you that will continue to live in that deluded world, the rest of us look forward to onboarding your former clients… in person. Rant concluded.
As for material changes to “real estate,” keep an eye out for adaptive re-use of existing assets. It’s already starting. There is a massive housing shortage in many parts of the country, and shopping centers, office buildings, malls, and other types of real estate are finding new life as converted apartments and live-work condos. The near future certainly won’t be this Mad Max apocalyptic hellscape some people are peddling, because the real estate industry will do what it does best: adapt.
On that note, one area I am particularly interested in is the shift to a more pronounced live-work multi-family design. We have seen a few multi-family developers already lean into this trend that has become more pronounced due to COVID, but it was already underway. These assets are an amalgam of traditional apartments smashed together with a co-working type amenity space. Giving folks the ability to walk down the hall or downstairs of their condo/apartment building and access office amenities and services that are comparable to what they would get by going into their employers’ offices.
This plays well into adaptive reuse and may very well accelerate further innovation in the active-retail space too. Ultimately, anybody that tells you they know exactly what’s going to transpire as a result of COVID is selling snake oil. There is still much to be learned but one thing IS for sure, and that is this post-COVID world will yield opportunities abound for those people and companies that can read the tea leaves and deliver something creative, unique, and in demand.BACK TO ARTICLES