It was supposed to be over by now, but the Delta variant has caused the impact of Covid 19 to linger indefinitely, and offices are having to make changes on the fly. Planning for the future doesn't involve building now.
Many companies were bringing back workers in September, but it doesn’t look like that will happen in measurable numbers. Current occupancy of downtown offices is between 50 to 60%.
Those temporary Covid measures companies have been employing like remote work, flex schedules, hybrid arrangements are getting hard-wired in. Office space efficiency in personnel space is measured in how many workers per square foot. “Fifteen years ago it was three people per thousand square feet,” says Moody Rambin Managing Director Bob Cromwell. “That’s been pushed to four, and I think with the pandemic, it’s going to shift back. No one wants to sit shoulder to shoulder with their colleagues anymore.” That’s negative growth, and that’s never the direction investors want to see.
We are in the midst of transformation as it relates to office buildings but the boundaries and direction haven’t come into a clear focus yet. What we do know is that there won’t be as many construction cranes dotting the downtown Houston skyline. Cromwell says the one exception is a high-rise office building near Discovery Green. “They pre-leased half of the building and they will get started. Other than that, there will be no new construction starts on the office side for the foreseeable future, unless there is a tenant who has signed a lease to take the space.”
Cromwell says investors are stepping back to see how things develop before committing to a major project.
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