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Jul 7, 2022 5:30 PM |
The pandemic was an extinction level event for the suburban office park
Unsurprisingly, suburban office parks have struggled during the pandemic. Contrary to perception, suburban office parks have struggled more than commercial buildings in urban areas over this time:
Quote:
NY Times: Lonely Last Days in the Suburban Office Park
By Emily Badger
July 5, 2022
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Today suburban office parks have drawn far less attention than downtown offices that are also threatened by remote work. But their decline reflects in some ways a more sweeping and permanent judgment — of once-dominant ideas about where Americans work, how the office should look, and what the suburbs should be. Many downtown offices, with the benefit of prime location, will need new facades and nicer interiors. Places that have been office parks will need a whole new identity.
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“I call it The Great Repurposing,” said Douglas A. Kiersey Jr., who is in the business of repurposing last century’s land uses into today’s logistics hubs. The real estate investment management firm he runs, Dermody Properties, plans to buy the 232-acre Allstate headquarters in suburban Chicago and redevelop it into a warehouse complex. That property “sits at the intersection of two dynamic changes to our lives,” Mr. Kiersey said. “The first one: work from home. And the second one is e-commerce.”
(It also sits on the Illinois Tri-State Tollway, which is especially valuable if you want to deliver iPhone chargers to wealthy consumers across Chicago’s north suburbs in two hours or less.)
For its part, Allstate recently bought an office building in downtown Chicago, although for what it hasn’t announced yet. The company no longer needs the suburban headquarters it has had for 55 years, it said in a statement, because 75 percent of its employees now work remotely, and 24 percent split their time between remote and in-person work. At a company where most workers went into the office daily for decades, today 1 percent do.
There was a time early in the pandemic when it seemed that suburban office parks might emerge as the winners in a restructuring of work. They’re the perfect setting to do business for people who don’t want to get too close to one another, or to hold working lunches. And they stood to benefit from several early pandemic assumptions: that workers would shun elevator buildings, that people would flee cities, that density was over.
“Essentially none of those have played out,” said Christian Beaudoin, head of global research advisory for the commercial real estate firm Jones Lang LaSalle. In JLL data, vacancy rates in the first quarter of this year were higher for suburban offices than for the central business districts in Chicago, Charlotte, Detroit, Philadelphia, Tampa and Washington. The firm estimates that 57 percent of suburban office space nationwide is so old as to be functionally obsolete. In the New Jersey suburbs of New York, that figure is 72 percent, among the highest in the nation.
It is true that a growing number of people moved to the suburbs during the pandemic. But employers didn’t particularly follow them. That’s because it’s not all that helpful to have a suburban office for your suburban workers when those workers actually live in very different suburbs far away. If anything, as people have moved farther out — encouraged by less frequent commuting — downtown locations have actually become more important, said Arpit Gupta, a professor at the N.Y.U. Stern School of Business. Downtowns are still the most central, accessible location for a scattered work force.
The larger pandemic trend, documented by Mr. Gupta and others, is that companies have been downsizing into upgraded buildings. Sometimes those better buildings are downtown. Sometimes they’re in the suburbs. Seldom are they in secluded office parks built in the 1970s.
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https://www.nytimes.com/2022/07/05/u...fice-park.html
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