Back in the winter of 2020, millions of U.S. employees were told to pack up their desks and prepare to work remotely for the foreseeable future. Little did anyone know back then that the foreseeable future would extend all the way to the fall of 2021 -- and possibly beyond.
Earlier this year, it seemed like office buildings would finally get an influx of people. Big-name companies started making their reopening plans public, and employers started sending out memos instructing workers to gear up for a return to in-person work in some capacity.
But then, the delta variant hit hard, forcing many companies to postpone their reopenings to late 2021 or early 2022. And that, of course, assumes that COVID-19 cases trend downward. If they don't, those plans could be delayed indefinitely.
All this has dealt a very serious blow to office real estate investment trusts (REITs). And the longer workers stay out of office buildings, the more difficult their recoveries are apt to be.
Still, some office buildings may be in better positions to move past the pandemic than others. And that's something real estate investors should pay attention to.
It's all about one key amenity
Office buildings that have built-in parking garages have a clear edge in today's awkward return to the workplace. While workers are starting to trickle back into the office, many are still far from on board with the idea of boarding a public train or bus to get to work. Instead, they're getting behind the wheel of their own vehicles, even if it means having to navigate congested city streets and battle for parking.
But in some cities, parking is virtually impossible to come by. And private parking garages can be prohibitively expensive in terms of both daily and monthly rates. Plus, some workers aren't returning to the office full-time, but rather a few days a week and completing their workweek at home. For these drivers, a monthly parking pass wouldn't even make financial sense.
It's for these reasons that office buildings with garages are more likely to see workers return sooner. If those garages aren't separately owned, office-building landlords and their tenants can work out arrangements to allow workers to park at a more affordable or discounted rate. That way, everybody wins. Employers get the benefit of having workers on hand for in-person collaboration, and employees don't have to spend half of their paychecks on parking.
A much-needed recovery
The danger in having office buildings sit vacant for too long is that it gives tenants too much time to reassess their needs. The more time workers spend doing their jobs from home, the more companies may come to realize that they can afford to unload square footage or give up their leases entirely.
Right now, getting people back to the office is a pretty hard sell between the state of the COVID-19 outbreak and many people not wanting to give up the flexibility of remote work. Offering built-in parking garages or lots removes one barrier to a full-fledged office return, and that's something real estate investors should take some comfort in.