There was once a time when many people hadn't heard of Zoom (NASDAQ: ZM), let alone used it. But given the number of people working remotely due to the COVID-19 pandemic, Zoom is now a way of life. That's good news for employers looking for continuity during the ongoing crisis, but it's bad news for real estate investors who own commercial spaces. The more companies realize how efficiently their employees can work from home, the less apt they'll be to renew their office leases. In fact, many real estate insiders have gone so far as to proclaim that the pandemic will be the death knell of office buildings.
But Amazon (NASDAQ: AMZN) might manage to change all of that. The tech giant currently has its sights on New York as it seeks to expand its office presence there, as well as in other major cities. And that could turn things around on the real estate investing front.
Will Amazon's move increase the demand for office space?
Many tech companies have been vocal in their intent to scale back on new office plans in the near term. In fact, Google (NASDAQ: GOOGL) recently announced a plan to keep employees home until the summer of 2021. Amazon's arrival in New York City, coupled with additional major cities, could therefore spark an opposing trend by inspiring other major players in the technology field to focus on office expansion plans.
Specifically, Amazon is seeking to introduce 3,500 corporate jobs in offices across the country. In addition to New York, it has a plan to expand its office presence in Dallas, Denver, Detroit, Phoenix, and San Diego within the next two years.
Before the pandemic, Amazon had been making plans to build a second headquarters in New York -- but it backed out and is instead looking to build that second headquarters in the Washington area. However, Amazon did say it would take the 25,000 new jobs it had planned to introduce in Queens, New York, and instead spread those opportunities out across different tech hubs, which included New York. And the tech giant has already purchased a building in midtown Manhattan, which it plans to occupy by 2023.
Investors can breathe a sigh of relief
Amazon’s announcement lends hope to the idea that office space may be coming back into favor -- and that New York City may soon emerge as a new tech hub. Real estate developers have been struggling to find tenants for new commercial leases, but with the arrival of Amazon, New York investors may see interest in office space start to pick up.
Of course, Amazon may not manage to fill its office spaces right away. The company has previously said that any employee who wants to can work remotely until Jan. 8, but Amazon does expect most of its staff to return to in-person work eventually. Given Amazon's success, it's likely that more companies will seek to follow in its footsteps, which means investors may be in line for an office building revival -- and an uptick in much-wanted revenue.