4 markets that will rethink space planning

Even with the rollout of mass vaccination, when considering the buildings that make up the nation's inventory, many won't be returning to "normal." What becomes clear is the potential for an over-inventory of space that will take several years to work through.

Here's just one example: Unilever, the giant consumer goods company and makers of such iconic brands as Dove® Soap and Lipton® Tea, is reconsidering its entire real-estate portfolio in light of operations after the pandemic. In a Forbes article, the company's CEO, Alan Jope, said, "We anticipate never going back to five days a week in the office. That seems very old-fashioned now." The article goes on to say, "That's over 150,000 Unilever workers worldwide [who] will never be going back to the office full-time."

Put simply, COVID-19 mashed the accelerator on the conversion to telecommuting … who needs to "go into the office" when the "office" is a video call away?

So, with more buildings than needed, here are four markets where space planning and building use will change in the coming years. A theme you're going to hear on the following pages is: convert and repurposing.

Take 150,000 Unilever workers, and then multiply that across all businesses, and one could see a glut in space developing. It will happen in two ways:

Offices will look different – the sheer drop in employees – not everyone in the space at the same time and some never returning – means a transformation to fewer and more-flexible work spaces used by several workers in rotation.

Too much inventory – the overall shift to telecommuting just means there likely will be too many offices and not enough companies leasing space.

Developers who have put up now-vacant core-and-shell commercial space may have it the easiest, so to speak, since the interior fit-out can flex to new uses other than pure office space. Some potentials for building out, or repurposing are: Retail, Fitness, Mixed-use, Healthcare.

A side note on healthcare spaces: One downside of the pandemic is a rise in the number of people experiencing mental health issues. A potential repurposing of office space could be for outpatient mental healthcare. There will also be a greater need for intermediate care. An article in Scientific American put it this way:

Intermediate care options such as intensive outpatient programs (IOPs) or partial hospital programs (PHPs) offer a way for patients to be engaged in intensive therapy, medication management and group support, but do not require patients to be admitted for a more-costly hospitalization.

While as of this writing it appears travel is starting to make a turnaround, it remains to be seen how quickly it will return to pre-pandemic levels. And we go back to telecommuting for the reason: Business travel has been radically changed – why "fly to" a client meeting when they're a video call away? Will corporate travel recover? Probably, but potentially not to previous volumes.

So what to do with excess lodging spaces? Some potential new uses could include: multifamily housing, student housing, mixed-use, retail. Perhaps one of the strongest business cases could be conversion into senior living, assisted living and skilled nursing facilities.

One caution in the senior housing scenario is retrofitting to meet building codes and safety standards for older adults, and increased damage potential, including:

• Bath and shower modifications
• Handrails for resident mobility
• Increased wall, door and corner protection
• Signage change-outs for persons with vision issues

Changes and increases in online-learning could have impacts on the quantity and need for campus housing. The scenario isn't much different than video meetings for business … that is, do students need to be on campus to learn?

A solution for excess dormitory space could be leveraging a trend that seems to be gaining traction: intergenerational living, which blends students and older adults in shared spaces.

According to an Insider article:

Donna Butts, the executive director of Generations United, a nonprofit that promotes intergenerational programs, policies, and strategies, told Insider, "With intergenerational programming, it helps older adults develop a sense of purpose. They're giving back, they're engaged, they're stimulated by the interactions with younger people. And it also gives them hope for the future. For younger people, it really helps in terms of a sense of roots, history."

As with office space, similar discussions around online tele-learning are happening in school districts around the country. In an article in Buildings magazine, the concept of "room and Zoom" was proposed:

"Let's say a classroom used to have a 33-student capacity in it, and now it's half," says Peter Bachmann, principal and market sector leader for JCJ Architecture. "The question becomes: what happens to the remaining students?"

One solution being discussed is the concept of "room and Zoom," where some students (the number depending on physical distancing capacity) are in the classroom for a lesson, while the remaining students are elsewhere (at home, their dorm room, etc.) seeing the same lesson virtually.

A thesis by the Aspen Institute envisions COVID-19 as the catalyst for a rapid evolution to the community schools model:

The nation's schools should "Align resources and leverage partners in the community to address the whole child; Build partnerships between schools, families, and community organizations to support healthy learning and development in and out of school; Blend and braid resources to achieve this goal."

As with intergenerational learning and living on college campuses, reductions in classroom capacities could mean an opportunity for school districts to adopt a more-holistic approach by repurposing programs and space to not only enhance the students' learning, but also serve the larger community as a whole.

Granted, as the pandemic appears to be winding down in the U.S., things are still in a state of flux as the economy begins to spool back up to full force. The longer term impacts on businesses and space utilization remain to be seen. But, what seems clear for the foreseeable future is many companies are rethinking their entire real estate portfolio, and the potential oversupply will likely lead to the sale, conversion and repurposing of built spaces.