The coronavirus pandemic has changed the way companies operate by and large. Not only have many shifted their staff to a remote work setup, but many are now thinking of unloading expensive office space and downsizing to a lot less square footage. It's a change that has real estate investors worried, especially as office buildings face a prolonged recovery that could result in widespread vacancies in the interim.
Another thing that's changed during the pandemic is conventions, or a lack thereof. At a time when social distancing has been crucial, gathering hordes of people under the same roof to share products or information has been out of the question.
But despite the general cancellation of conferences and conventions this year, many cities are moving forward with plans to build or improve on expansive centers to house these gatherings in the future. The question: Is that a smart investment?
Conventions may boom in a post-pandemic world
Limited coronavirus vaccine doses are already being rolled out to U.S. healthcare workers in an effort to put an end to the pandemic. And while health experts agree it will take many more months to vaccinate the entire U.S. population, the good news is that there finally seems to be a light at the end of the tunnel.
Once the pandemic comes to an end, there could be a huge uptick in demand for conferences and conventions as industries try to regroup and businesses attempt to drum up revenue and make up for lost time. In fact, many companies may reap savings in the next few years by downsizing office space and negotiating more favorable lease terms. That savings could, in turn, be used to fund conference participation.
Perhaps for these reasons, some cities are sinking loads of money into developing convention centers to welcome the masses. Indianapolis, for example, is working on a $550 million expansion for its convention center in the hopes of hosting a dental convention in 2026. Meanwhile, in Cleveland, officials are seeking $30 million to upgrade an existing underused health technology center in the hopes of drawing in crowds once it's safe to do so.
Thriving convention centers can be a boon to local tourism and businesses. When conventions take place, hotels get booked up, restaurants get busy, and retailers see an uptick in foot traffic.
Normally, there are more than 250,000 conventions and trade shows in the U.S. each year. In 2016, these events drew in 84.7 million people, who spent a total of $110.4 billion, according to the newest survey by the Events Industry Council.
A surge in conventions could revive many hard-hit cities and businesses following the pandemic, but for those gatherings to happen, cities need to have the space. Of course, revenue from these conventions will, for some cities, initially be offset by the money it costs to upgrade and expand the centers that house them. But investing in convention centers could still very much prove to be a smart move for cities, especially at a time when the end of the pandemic finally seems like it could be within reach.