This article was written for our sponsor, CBRE | Raleigh.
The past year was yet another filled with surprises, challenges, and unpredictability. After the complete shutdown in 2020 due to COVID-19, 2021 saw a cautious return to normal life. Then, as variants swept through the country, people were yet again forced to navigate a “new normal.”
Due to vaccines and proper precautions, more normality is possible, but there are still hurdles to clear. In the world of commercial real estate, employees are continuing to address the hurdle by returning to the office or adopting a hybrid work schedule by changing the way office space is used and developed.
Thanks to this, the Triangle office of global commercial real estate firm CBRE has seen a bounce back in the market since 2020.
“If you go back to the summer of 2020, there were people writing articles about how brick-and-mortar retail and offices were dead —yet we’ve actually seen steady retail leasing activity throughout the pandemic as well as increasing activity in office sales. Office leasing has understandably moved at a slower pace, but we are seeing increased activity with an overall office market occupancy rate of 88 percent. Downtown Raleigh and Downtown Durham, which have been slower to rebound than other submarkets in the area, are experiencing very good activity as well. In particular, Downtown Raleigh experienced some of its highest retail leasing activity at the end of 2021,” said Tom Fritsch, senior managing director at CBRE | Raleigh. “Land, retail, multifamily investments, office investments and life sciences are all very active throughout our expanding market. Since the fall of 2020, we have seen an increasing number of inquiries and investment dollars from out of market companies.”
With health and safety top of mind, nationally and in the Triangle, offices are figuring out how they can make a return that keeps employees engaged.
“A lot of companies are realizing that the pandemic is evolving and while we know how to navigate it more effectively than we did two years ago, we still do not know how much clarity on when it will subside. Because of this, it’s important to adapt and avoid completely shutting down every time there is a new variant,” said Fritsch. “In a lot of cases, we’re seeing hybrid models that mix that need for in-person collaboration while also keeping people distanced and as healthy as possible.”
Hybrid models have already gained popularity and will likely last well beyond the pandemic. In fact, data from Global Workplace Analytics [SL1] predicts that 25% to 30% of people will continue working from home at least one day a week as companies continue to reoccupy the office.
For employers, that means making those days in the office engaging and as safe and enjoyable as possible. In-office trends that CBRE has observed include changes and additions to amenities, as well as adapting and in some cases increasing space to allow for more distance between co-workers.
“Many workers have embraced the functionality and autonomy of working from home and understandably will be reluctant to give that up. Companies are realizing it’s important to create a destination environment to entice people back to the office. Many are looking for more engagement with outdoor space, whether that’s patios, terraces and/or balconies. These outdoor connectivities would provide healthier ways to operate,” said Fritsch. “Under the hybrid model, a company may have employees who are only in a couple of days a week, so you don’t need desks for everybody. You can reconfigure some of that space to spread out, offer free-addressing and increase areas for collaboration or even provide enclosed working environments.”
In order to address the “destination” quality that Fritsch referenced, some offices are taking their amenities to the next level, incorporating things like workplace yoga, simulator rooms, and wine bars to name a few.
While more COVID-19 variants have added an additional layer of unpredictability to the market, Fritsch has hope that projects that have already been in the works will continue to lead growth in the Triangle area, without compromising the health or quality of life of local residents.
“As far as growth goes, the last five years have been remarkable, and with the in-migration and investments dollars happening, combined with the population projections we’re seeing, I think that’s going to continue. Our market has plenty of projects in the works to make this entire area more easily connected and accessible, including the Capital Boulevard improvements project planned between Raleigh and Wake Forest, and the conversion of Highway 421 into future interstate I-685 into our market. We’re even seeing our market radius continue to expand to include areas such as Sanford and Chatham County,” said Fritsch.
“My hope is that retain our quality of life and remain true to our authenticity as we continue to grow as a market and that we’re intentional about doing so,” he finished. “We need to be smart in how we move forward and ensure we do not lose focus on all aspects of our community including affordable housing and public transportation.”
This article was written for our sponsor, CBRE | Raleigh.
