CBRE Flash Call: COVID-19 What Should Occupiers be Focused on Now?

We expect an economic downturn in Q2, with -20% GDP growth and the loss of eight million jobs in the U.S. Recovery should start strongly in Q3 and then gain, aided by the $2 trillion U.S. stimulus package, with 5% GDP growth forecasted for 2021.

Industrial and logistics remain one of the best-positioned sectors as demand for e-commerce increases under the current COVID-19 situation. The data center sector may also remain strong due to the growing reliance on cloud and network services as more people work from home and shop online. The hotel and retail sectors have been the most impacted and office leasing activity is largely on pause. We anticipate tenant behavior to shift to a strategy focusing on renew in place, blend and extend or short-term flex space options.

The implications of COVID-19 on business are fluid and ever-evolving. For current leases, and in today’s environment, CBRE believes it is in both parties’ interest to know the obligations under a lease and come together to discuss any hardships created by COVID-19.

CBRE has developed advice for occupiers and owners to help you navigate this environment.

COVID-19 Implications for Commercial Leases

For both active projects and project closures, having well-documented project charters, risk registers and change orders will serve clients and project managers well in the coming months. We see some disruptions in the supply chain and anticipate future interruptions. Staying close to supplier partners and understanding supply chain impacts is essential for both active and on-hold projects. All companies and project teams should consider reevaluating capital plans for the remainder of 2020 and into 2021, looking for opportunities to reallocate funds to better align with a company’s revised goals and objectives.

Additionally, project teams should consider how to effectively manage the reactivation of any projects put on hold.

CBRE’s project management experts have prepared recommendations on managing capital projects and programs during a time of crisis.

Managing Capital Projects And Programs During A Time Of Crisis

Occupiers are currently facing complicated questions within areas that historically run on auto-pilot—including cleaning, lobby security, HVAC, food services and workplace safety. CBRE has identified seven critical facilities decisions you can make now (or pursue with your landlord) to keep employees safe, manage business continuity and prepare for re-opening.

Seven Smart Facilities Decisions During a Pandemic

Set your team up for success and ensure that employees have an optimal workplace setup at home by offering reasonable accommodations and enhancement opportunities such as a monitor, an ergonomic chair or even a small desk to those employees who need it. Conduct training sessions for virtual collaboration tools to help employees feel connected. Maintain culture and engagement by scheduling time for more frequent and intentional communication, using video whenever possible. Keep your home and workspace healthy and safe by wiping down surfaces and frequently touched items like light switches and cabinet handles, and continue frequent hand washing.

More insights on how to stay productive wherever you work:

The Art of the Virtual Meeting

Effective Team Collaboration

Occupiers can take a proactive approach to evaluating and managing their portfolios during this time. Take stock of your portfolio (e.g. occupancy, notice dates, specific lease clauses), understand existing projects and prioritization, and assess your business’s space needs and how those needs may be changing. Know your markets, each of which will be impacted differently, and build relationships with owners and landlords. Develop actionable short- and medium-term plans to reduce costs, plan for business continuity and capitalize on strategic opportunities. Now is also a good time to make necessary preparations within your organization and with external partners to position your company for success once business ramps up.