As more people have adapted to working from home during the coronavirus pandemic, the demand for office space has been in flux.
Experts are still trying to guess what the impacts of the pandemic will be on office spaces as some businesses have shuttered and others have pivoted and streamlined their processes, David Starnes, principal and owner of CIVISTRUCT Strategy + Development, said Tuesday during a presentation to on the Longmont office and industrial real estate market presented by the Longmont Economic Development Partnership and its Commercial Brokers of Longmont group.
“COVID-19 has accelerated adoption of some market trends that otherwise would have taken years,” Starnes said.
One of those trends has been an increase in people working from home or in a hybrid model in which they go into the office only a few days a week.
When the pandemic hit, vacancies in office space increased from 8.6% to 12.1%. Office buildings with 10,000 square feet or less had less vacancy than large office spaces of 50,000 square feet or more, according to Starnes.
“Offices still play an important role to feel connected to company culture, engage in collaboration and bonding with co-workers, foster creativity and innovation, onboarding of new employees, and training/mentorship,” Starnes said. “However, office space can be a significant expense on a company’s balance sheet that businesses are currently evaluating to see what is the optimal space configuration to maintain employee productivity and keep expenses low.”
Longmont has approximately 12 million square feet of office space, however, all but 5% of that space was built prior to 2010, most being an average of 61 years old, said Starnes, who identified a need to modernize existing office space or allow for new spaces to be built to accommodate the needs of businesses.
One of those needs to emerge during the pandemic is optimal configuration to allow for social distancing, which may require more square footage per worker, he said.
Due to the amount of space available in Longmont, Starnes said he believes the city is poised to take advantage of the upcoming trend of larger companies pivoting to accommodate suburban office migration. Suburban office migration allows people leaving cities to live in the suburbs the opportunity to work closer to home, he said.
This trend works in Longmont because these offices favor “suburban markets that can provide urban amenities with culture, shopping, restaurants and live/work/play areas,” according to Starnes’ report.
“In addition, emerging demographic trends support the shift to suburban locations as the millennial generation, which is larger than Generation Z, is reaching the age when people tend to move from the city to the suburbs,” the report states.
The number of people between ages 30 and 49 will grow by 8.4 million over the next decade while the population of those between 20 and 29 will shrink by 400,000, according to research by John Burns Real Estate Consulting.
How office spaces will continue to be used during and after the pandemic remains an uncertainty for experts, especially as businesses find ways to adapt.
“We do think office (space) will play an important role in the economy going forward, particularly for certain industries … The office isn’t going away, it is just how the office will be used is going to change in the future,” Starnes said.