With the COVID-19 pandemic forcing many employees to work from home, a senior real estate executive has predicted this may cause companies to slash the amount of office space they are prepared to rent.
This, according to Hayden Hutton, chief operating officer of Terra Caribbean, may lead to a slump in commercial property owners’ rental income and a rise is vacant commercial spaces.
Speaking at Terra’s virtual launch of the 2020 edition of real estate listings compendium, The Red Book, Hutton blamed the COVID-19 pandemic which has disrupted global trade, business, leisure and travel.
He said: “In the shorter term there will be pressure on rents… from holidays to deferments, to discounts for a two to three months period so far. That will be a continuing conversation as the market opens back up.
“One of the big questions we are getting from clients is who should bear the load. Overseas there are rent protests and so on.
“What is for sure is that there is uncertainty and nobody knows where the market is going to be. So there is a focus on the short-term… but there must be conversations.”
Pointing to places like New York, Hutton said large companies are now reconsidering their office space requirements as most employees work from home. He said Terra was preparing to conduct research in Barbados and abroad on the subject to gauge consumer sentiment.
“It looks like what is going to happen is offices will return on a rostered, rotation basis in order to honour the physical distancing protocols,” he explained. He added that employees, having experienced working remotely from their homes, prefer this mode of employment or some hybrid version of it. He said that many workers were keen on working some days in the office and other days at home.
At the same time, he cautioned that many businesses were locked into three to five-year leases which may carry penalties for early exits. In addition, he noted that physical distancing may result in some companies being forced to rent more office space in order to adhere to the distancing requirements.
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