Jim Kramer on CNBC Squawk Box recently rhetorically asked: will this mandated “work from home” be the Netfix for office buildings as Netflix was for movie theatres? I don’t think the analogy fits. Pre-COVID 19, tenants were laser-focused on collaborative spaces, amenity rich buildings all to foster company culture. I don’t see how technology can replace the human experience. Instead, I think we’ll see more of an evolution (versus revolution) of the workspace, including work from home as part of the strategy.
As Bisnow recently reported, CoreNet Global’s April 28, 2020 survey of corporate real estate professionals found that 69% of companies are planning to reduce their office foot print after the recent forced work from home experiment. By contrast, former Google CEO Eric Schmidt on a recent “Face the Nation” interview predicts that office space will be in greater demand due to social distancing and more smaller offices in a “hub and spoke” format. I question, will the appeal of remote work still be attractive to employees after this pandemic passes and they have a choice? While the jury is out on the long-term implication of remote work, in this post, I address the Pro’s and Con’s and what policies companies should consider implementing to have an effective work-from-home (“WFH”) strategy.
Looking for a great deal on office space? A sublease may be the answer. Subleases are often attractive to businesses as they offer a low cost, flexible, turnkey solution. Start-up companies and established companies can find subleases to be a great opportunity. They are, however, not without challenges and risks. In this post, I discuss the advantages and disadvantages of subleasing and how businesses can navigate the sublease process to get a great office space that will help propel their business.
As commercial real estate values are rooted in a dependable cash flow, landlords (and their lenders) are keenly interested in the creditworthiness of their tenants. As most businesses are not in the Fortune 500, many will face the issue from prospective landlords of how they will secure their financial obligations under the lease. Where landlords are increasing their construction allowances to address rising construction costs, lease security has taken on increased importance for tenants today. It should be addressed early in the business negotiations when multiple properties are under consideration. A tenant’s business is best served when they can put more of their money to work for their business instead of having their money held hostage by their landlord. In this post, I outline the three primary approaches to lease security: (1) Cash Security Deposit; (2) Letter of Credit; and (3) Guaranty.