Real-Estate

Council Post: What The American Rescue Plan Means For The Future Of Downtown Office Space

Kenny Kane is the Chief Operating Officer at Firmspace

For many companies, the jury is still out on whether it’s worth it to return to the office in full force after widespread vaccination. Some have downsized thousands of square footage of commercial real estate for smaller spaces, taking the bet that remote work is here to stay. Others are already sending their workers back to the office, or plan to in September, which has emerged as the tentative return date for some fraction of the workforce.

Meanwhile, President Biden’s American Rescue Plan promises an economic lifeline to cities across the country. The future of downtown areas like Manhattan that have struggled during the pandemic hangs in the balance.

While remote work has certainly been a blessing to many, professionals still need offices and cities still need professionals. Here’s how the American Rescue Plan, combined with new workflows, can create downtown ecosystems that work for everyone.

Local Economies Rely On A Steady Flow Of Office Workers

We’ve read story after story of the restaurants, retail shops and countless other small businesses that shuttered during the pandemic. For those in downtown areas, the main blow was the absence of regular patrons: office workers.

Economists generally agree that city centers need an information-sector infrastructure to buoy local economies. As white-collar workers move through cities, they spend money on food, clothing, transportation and other services near their offices. Without that cash flow, small businesses aren’t the only part of the economy that suffers. City budgets lose critical tax dollars from corporate payrolls to fund essential services like schools and sanitation.

In New York City, commercial real estate makes up about half of the city’s property tax revenue. Government officials expect a $2.5 billion decline in the next fiscal year. Despite the mass exodus from America’s biggest metro areas to locales with more space and cheaper rents, however, urban populations are unlikely to change dramatically for the long term. A wave of young professionals will inevitably make its way to the cities as the pandemic fades, and that opens up a lot of room for opportunity.

The American Rescue Plan Can Strengthen Urban Ecosystems

The nearly $2-trillion-dollar stimulus package, now officially law, includes a number of provisions that can help cities. In addition to the funding intended to help individuals and their families bounce back from financial hardship during the pandemic, the plan provides funding for: 

• Public safety organizations, including firefighters and vaccine administrators.

• Transportation infrastructure, including transit agencies and airports.

• Broadband for schools and libraries.

• Housing aid and emergency rental assistance.

The plan also offers hope for small businesses across the country. Another round of Paycheck Protection Program (PPP) loans are available, as well as a number of grants specifically for shuttered arts venues and restaurants. This wide-scale investment across city infrastructure serves as a welcoming backdrop as residents of the country’s cities return to work. 

Staggered Work Schedules Promise Less Crowded Commutes And Buildings

The gradual return to offices throughout this year probably won’t bring the workforce back to pre-pandemic rhythms. I think that’s a good thing. As companies embrace hybrid work models and phased returns, professionals may be able to avoid more stressful commutes to the office — or at least enjoy a more peaceful rush hour, which is key to employee well-being. Long commutes take a toll on workers’ overall health and productivity.

Large commercial office buildings, too, likely won’t see the same daily traffic that they did before the pandemic. Building managers may be able to coordinate with tenants to stagger in-office days, which means workers won’t have to worry about being exposed to the virus in crowded elevators and entryways.

Some urban planners hope that mixed-use real estate — the development of more affordable residential housing in commercial districts — could become more popular post-pandemic. This would allow workers to live closer to the office, alongside everything else they need, like grocery stores and pharmacies.

But the hybrid model and gradual return at least enable workers who do commute to save time by working from home once or twice per week.

Somewhere Between Full Remote And Full Office: The Best Outcome For Our Cities

All the people who need the office — for collaboration, technology, privacy or whatever the preference may be — will constitute the office worker population that our cities need to keep thriving. And their return won’t have to come at the cost of strained infrastructure and crowded spaces that worsen the spread of the virus. Hopefully, with the help of the stimulus package, commercial real estate leaders will be well-equipped to welcome urban professionals to an environment that makes them feel safe, supported and engaged.


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