As the 2010s came to a close, the national demand for office space at the beginning of the next decade was predicted to increase, just as it has every year since 2011. These forecasts couldn’t have anticipated the COVID-19 pandemic and the economic uncertainty it has caused since March 2020. Since social distancing and staying home, coupled with state-imposed orders to close non-essential businesses and office spaces, have been used widely to curb the spread of the novel coronavirus, many companies have shifted to work-from-home models for the foreseeable future.
This transition to remote work could prove devastating for the office market. With so many people working from home, employees and employers may come to realize that traveling to and from an office every day is no longer necessary for their work. Internet-based messaging and video chat platforms, for example, have proven valuable stand-ins for in-person office interactions. The growth of cloud storage for important company documents, databases, email servers, and more has further powered companies to operate remotely, suggesting that shared spaces may no longer be needed for accessing vital tools.
“People are realizing you can work from home more easily than you thought,” says Kevin Wolfer, CEO of Kennedy Funding. “With so many digital communication platforms, people are realizing there will be more remote opportunities.”
The COVID-19 pandemic has also thrust the U.S. toward the start of a recession, an economic shift that has already resulted in mass layoffs and will certainly lead to more jobs lost in the coming months. As companies continue to lay off their workers and downsize, they won’t need as much office space to accommodate large numbers of employees. If these companies later need to hire more people than can fit in their newer, smaller offices, they can always – as this pandemic has made so readily apparent – onboard new employees in remote roles.
Hiring new workers, though, may prove uncommon due to the impending recession. Instead, many companies will need to cut expenses however possible, which may mean reducing office size to pay less rent (or abandoning an in-person office altogether). Eliminating an office doesn’t just cut back on rent costs – it minimizes the need for office “extras” here and there like the coffee machine, which can add up. These savings may be appealing to companies looking to cut costs whenever and wherever they can.
Companies looking to remove these maintenance and purchasing burdens from their everyday workflow had already begun turning to coworking spaces before the pandemic. Coworking spaces might thus blossom once the pandemic passes and a semblance of everyday life returns.
As a result, traditional lenders have already tightened their already-strict criteria and have reduced the number of office projects to which they lend. Kennedy Funding, on the other hand, has the flexibility necessary to evaluate each loan deal on its own merits, without completely discounting an entire sector. Even given the changes that the COVID-19 pandemic presents, Kennedy Funding doesn’t have a blanket “no” rule for lending money to office spaces. Contact Kennedy Funding today to secure the loan you need.