1. Tenants in less expensive real estate markets and landlords in higher-rent markets are both feeling the pinch as tenant improvement expenditures rise. Construction material costs (particularly lumber) are fast-rising, and in most major marketplaces, delays in scheduling are common due to municipalities working from home. Holdover clauses, swing space, and co-working providers that have been well-negotiated can all help with timing issues.
2. There have been no instances of space design adjustments, according to two significant asset managers that represent over 10 million SF of office space from LA to NYC. As office renters plan for the long run and look past Covid, pre-pandemic tenant build-out plans remained mostly constant.
3. Within their workplace space, tenants are more concerned with amenities, technology, and wellness. As companies look for strategies to boost workplace usage, encouraging their employees to return is becoming more important.
4. In some markets, sublet figures may be exaggerated when brokers observe their customers removing their offices from the sublease market and planning to rehire their employees.
5. Commercial real estate owners must prepare for the impact of 5G on their properties and future tenant demand. Large property owners (such as the LV Raiders) see 5G as a fifth utility. When signing a 5- to 10-year lease, tenants should keep this in mind. Equipment, appliances, and other important business technologies may be better tuned for 5G, even if it isn't widely used yet (during your next lease term). In the future, contracts should clarify how a building owner assures that their premise is fully capable of offering 5G to its tenants.
