by John Hurley
Like so many industries, commercial real estate has been in flux due to the uncertainties in the market that COVID-19 is creating. Companies are reluctant to sign new lease renewals until their workers can actually utilize it and companies with existing leases are unlikely to sign on for a bigger building, even if their employee base has grown, for the same reason. However, despite the pandemic, there are still reasons to be optimistic about the year ahead. Here’s what I’m forecasting:
1. The office will return: After nearly a year of working from home, teams are eager to get back into the office, including myself. Employees crave and miss human interaction, particularly when it comes to work-related collaboration. In fact, Google recently publicized its decision to eventually return to the office, noting the importance of collaboration. In-office discussions are especially important for junior staff members. Without an in-person element, it is hard to form lasting career connections and learn from mentors on-the-job. Everyday interaction encourages growth, and while we have done our best to capture that in virtual spaces, we are eager to (safely) return to an in-person career growth model.
2. The life science industry will continue to boom, boosting all facets of development. In Boston, the life science industry is experiencing explosive growth. At the same time, with construction labor and material prices rising, it’s become more expensive than ever to create multi-family and residential developments, despite the increased need for these living spaces. Mayor Walsh’s Boston 2030 plan has set a goal for the overall creation of 69,000 new units of housing to be built in Boston by 2030 in order to keep the region affordable and accessible. In 2021 and beyond, I expect to see more Boston developers incorporate additional lab and life science aspects into their mixed-use projects. The lab and life science markets can help subsidize some of the more cost-prohibitive residential construction. In turn, this will create opportunities for more affordable housing units, helping to make housing more equal and fair for all.
3. Development teams will increase their focus on the health and wellness of those working on the building, not just the future tenants of the building. COVID-19 has completely forced development teams to reconsider every facet of the construction process from a wellness perspective. Protocols for on-site sanitization and for entering and exiting a building have changed drastically overnight. These changes are for the better of the workers involved. Beyond being important wellness initiatives, the changes have forced developers to keep the health of construction teams at the forefront of their minds. I think these measures will be here to stay, and will lead to developers increasing construction budgets in order to maintain these initiatives.
Despite the pandemic’s unprecedented challenges, many are leaning in to create new and exciting innovations and changes that may actually improve some industries. While it’s certainly anyone’s guess how 2021 will unfold, I am hopeful that we will bounce back as an industry.
John Hurley is senior vice president of the Boston-based HYM Investment Group.