As vaccinations become more widespread and the pandemic appears to be receding (at least here in America), a question among investors in and operators of a major segment of our commercial real estate industry is increasingly: Will people return to the office?
Actually, that’s perhaps a two-pronged question: How many people will return to the office, when, and where? (OK, that’s three prongs.) Anyway, complicating things as we come to this fork in the road is yet another factor: gas.
As if there’s not enough to think about -- how much space is needed in a socially distanced new normal, whether vaccinations should be required, and how to even get them to come back now that they’ve worked at home, just for starters -- it turns out that there’s a shortage of fuel truck drivers that could complicate that commute.
Supply isn’t the problem -- it's delivering it
“Coming This Summer: Gas Stations Running Out of Gas” says the headline on this recent CNN article.
Says Ryan Streblow, executive vice president of the National Tank Truck Carriers trade group: "We've been dealing with a driver shortage for a while, but the pandemic took that issue and metastasized it. It certainly has grown exponentially,”
“Metastasized” is an ugly word, to be sure, but Streblow has a point. He says between 20% to 25% of tank trucks nationwide are parked because of the lack of qualified drivers. At this point in pre-pandemic 2019, that figure was 10%.
The article goes into more detail about how the pandemic has led to more retirements and general churn in that segment of the workforce, and how a shortage of deliveries can ripple through the economy -- right as demand for gas is expected to spike along with a return to travel.
What the article doesn’t address is how problems filling up the tank could complicate filling up the office.
The Millionacres bottom line
Will there be long searches, long lines, and higher prices this summer and bleeding into fall? How will commuters react to that when they’re told they have to return to the office, and there are no realistic public transit options?
How many would switch jobs if they’re forced to make that choice? Problems filling open jobs are affecting wide swaths of the economy, perhaps threatening the nascent post-pandemic recovery. Will this make it worse?
No two situations are alike, but investors in office real estate might want to begin thinking about that now, whether you’re a direct owner or invest indirectly, for instance, through office real estate investment trusts (REITs).
How much risk per gallon does your portfolio face? That answer could vary widely depending on holdings and locations. Time to check that tank for this byproduct of the plague that is COVID-19.