Covid and property speculations
23/06/20 13:59
It is not funny - Covid pandemic has brought the world to a standstill. Businesses have furloughed staff en masse. The staff still retained has gone through a world of changes.
We have learned to work remotely. Staff have learned to use Zoom and other platforms to conduct meetings. Both for staff meetings and client meetings. Video conferencing have had its first breakthrough after 20 years of trying and the winner is not Cisco.
But the even bigger looser is commercial real estate. We now have millions of companies who have realised they do not need big or fancy offices. Lots of staff will be laid off - reducing the need for office space. But not only that - the remote working seems to be productive for a lot of the people. People who used to travel to an office every day. Now they have figured out that a lot can be done without having a physical space in an office. So even less commercial space needed. No more need for extensive travel to and from work which will cut down on demand for public and private transport.
But the big big looser is commercial real estate. Not only are landlords losing a lot of retail outlet tenants - they will be loosing office tenants faster than you can throw money out a window. But I think a lot of people do think that Commercial landlords have had it coming for ages. They have refused to budge on prices despite depressed retail markets. They have had property sit empty for ages waiting for the "right" tenant willing to pay the extravagant price. They have mercilessly increased prices above inflation for year and years. But now it seems the market will bite back and bite back hard.
Just before the Covid pandemic we had the WeWork pandemonium. WeWork is a "short term" business/office sharing company that went through a rather turbulent period just before they wore supposed to be listed on the stock exchange. But the listing fell through as the valuation was in most people's opinion - crazy… (as in much to high)
So it ended up in a situation where WeWork needed rescue from Big Daddy SoftBank - and even the rescue turned into newspaper headlines.
And everybody said WeWork does not have a future.
I now disagree - I think WeWork has a bright future if they manage the Covid19 situation smart.
I do think WeWork and other companies like them now have a bright future ahead of them. Demand for temp, short-term and flexible office space will EXPLODE after Covid19. WeWork can renegotiate a lot of leases - and we think clients will storm into WeWork's arms once they have given up on their "expensive" city leases.
We have learned to work remotely. Staff have learned to use Zoom and other platforms to conduct meetings. Both for staff meetings and client meetings. Video conferencing have had its first breakthrough after 20 years of trying and the winner is not Cisco.
But the even bigger looser is commercial real estate. We now have millions of companies who have realised they do not need big or fancy offices. Lots of staff will be laid off - reducing the need for office space. But not only that - the remote working seems to be productive for a lot of the people. People who used to travel to an office every day. Now they have figured out that a lot can be done without having a physical space in an office. So even less commercial space needed. No more need for extensive travel to and from work which will cut down on demand for public and private transport.
But the big big looser is commercial real estate. Not only are landlords losing a lot of retail outlet tenants - they will be loosing office tenants faster than you can throw money out a window. But I think a lot of people do think that Commercial landlords have had it coming for ages. They have refused to budge on prices despite depressed retail markets. They have had property sit empty for ages waiting for the "right" tenant willing to pay the extravagant price. They have mercilessly increased prices above inflation for year and years. But now it seems the market will bite back and bite back hard.
WeWork Pandemonium
Just before the Covid pandemic we had the WeWork pandemonium. WeWork is a "short term" business/office sharing company that went through a rather turbulent period just before they wore supposed to be listed on the stock exchange. But the listing fell through as the valuation was in most people's opinion - crazy… (as in much to high)
So it ended up in a situation where WeWork needed rescue from Big Daddy SoftBank - and even the rescue turned into newspaper headlines.
And everybody said WeWork does not have a future.
I now disagree - I think WeWork has a bright future if they manage the Covid19 situation smart.
I do think WeWork and other companies like them now have a bright future ahead of them. Demand for temp, short-term and flexible office space will EXPLODE after Covid19. WeWork can renegotiate a lot of leases - and we think clients will storm into WeWork's arms once they have given up on their "expensive" city leases.