Today we sat down with real estate and finance expert, Richard Maize to discuss the outlook for the commercial real estate industry after the impact of COVID-19.
Let’s dive in.
Moderator: Do you think that companies will go back to business as usual and return to the traditional work format of working with a team in an office after the pandemic subsides?
Richard Maize : I don’t think the business environment will ever be the same. Human beings are simultaneously very adaptable and creatures of habit. We have been in “the other way of business” for a year now. That is the adequate time to develop new habits including work practice. We are so advanced by way of communication through technology therefore we can still be efficient whilst doing business remotely. Furthermore, If a company can produce even 90 % of their previous revenue by way of remote interfacing, then the savings of leases and some management personnel, will more than justify the new era of the “non office environment.”
Moderator: That’s a great point about saving money on leasing an office space, do you think higher end companies will still keep a luxury office space in the future? Or have most companies become accustomed to working to not paying for the luxury offices that have been so accepted and practiced in the past?
Richard Maize : I think this pandemic has shown everyone in a variety of industries that fixed offices may very well be unnecessary and quite frankly, a bit of a waste of money. That capital could be funneled directly into employee’s salaries as well as the company’s take home profit.
Moderator: Interesting, where will these teams go when they have to have meetings require their physical presence, for things such as contract signings?
Richard Maize : If my hypothesis is accurate, the old “Fegan Suites” or co-working spaces will be utilized when face to face meetings are absolutely required. In Los Angeles especially, there are so many wonderful private spaces such as San Vicente Lofts for this type of thing.
Moderator: Alright, so what do you think are the challenges that management teams face now that their teams are working from home?
Richard Maize : Management teams definitely have their hands full having to make sure that their teams are actively working, meeting their deadlines, and being honest about their hours put in. This is where you really need to trust your team, there are however applications that can be installed on company laptops that monitor active working time if necessary. These applications are also great for information sharing and leaving notes for other team members to keep everyone on the same page.
Moderator: What are the other advantages and disadvantages of working from home?
Richard Maize : So, I am an old school kind of guy. I like going to the office and interacting with other employees. I think there’s something to be said for the collaborative process when you work together in person. Being at an office also eliminates certain distractions that you would find at home, and meeting new clients face to face usually gives them a better idea of if you’re the right fit for their needs, versus a zoom call. So that’s the down side. That said, working from home allows for employees to have a bit better work/life balance, they may be better rested since they are able to spend less time sitting in traffic trying to get to the office, and overall it saves companies money to have the work be done remotely. It’s a tough call really, because you have to way efficiency vs. productivity and decide what works for your team.
Moderator: So what happens to the commercial real estate industry as a whole if businesses no longer need office spaces?
Richard Maize : I think we are going to see a lot of office spaces turn into luxury co-working spaces with memberships. We are going to see a lot more of those pop up. Additionally, in Los Angeles, we are in a housing crisis, so I could also see many of the office spaces being turned into residential properties. Residential real estate has thrived throughout the pandemic, so I think that’s really the place to be right now.
For more insight and advice from expert investor, Richard Maize head to https://richardmaize.com/category/blog/