Graphic courtesy WalletHub

The COVID-19 pandemic for many has changed their living rooms into office space. What’s that mean for commercial real estate as leases expire and business owners reassess their needs?

John Harshman, founder of commercial brokerage firm Harshman & Company, said the market has definitely changed, and in ways as unpredictable as the public health crisis itself.

“Telecommuting certainly has impacted business and therefore commercial real estate,” he said. “Example: many financial planners and stock brokers are working at home and do not patronize downtown restaurants at lunch which hurts the restaurants. Some businesses may realize that they can work as effectively with employees working at home and ultimately some businesses will reduce office space.”

The bigger question, though, may not be whether change is coming but whether that’s bad for the economy or not.

A newly released WalletHub survey found nearly 60% of Americans believe the pandemic has changed the way people work for the better. Roughly one third of those surveyed believe the physical office to be “a thing of the past.” In fact, 41% of respondents think a requirement of working in the office instead of at home should come with an increase in pay.

Moreover, Americans according the survey seem ready to change other habits if telecommuting becomes more of a norm. About 33% would choose a home closer to their extended family if a commute wasn’t a concern, and 14% would choose to live somewhere more suited to outdoor activities, which may signal consequences for the condo market and a shift in prior trends that favored downtown living.

Ultimately, Harshen said change comes regardless, and it’s just the form that sometimes isn’t known until a transformation happens in the market.

“I don’t see this as devastating to the office market but rather part of the natural evolution,” he said, “like the reduction of office space by the banking industry over the past 10 years.”

Graphic courtesy WalletHub