Pivots During COVID In All Asset Classes
Like most companies, here at the CO OP, our team has gone completely remote over the past eighteen months. A few years ago, we could have never expected this change in work environment and culture. While we are slowly beginning to resume certain in-person interactions, we were pleasantly surprised by the expansion opportunities as a result of working remotely. Previously, frequent travel was commonplace to view new locations and meet clients. Starting last March, these trips came to a standstill and the shift to online meetings has become a part of our everyday hustle.
It is clear that COVID will continue to change the ways of many industries. Our team is especially interested as to how the pandemic will affect the real-estate and hospitality industries. The “Pandemic Pivot” is a trend that is touching all asset classes. We’re seeing commercial buildings turning residential, hotels converting to office space and luxury condos transitioning to extended-stay apartments. These are exciting times that spark creativity and sometimes concern. Let’s dive into these various adaptations and take a look at if these changes will be long-lasting.
Many people have turned a section of their home into an office space in response to the work-from-home surge. As one can guess, this has greatly impacted leased office spaces as tenants no longer require their amenities. In order to keep these leasing companies afloat, office spaces are now being converted into residential units. Though the layout of these previous office spaces may not be ideal for living spaces, this unforeseen pivot has turned out to be an effective solution for both lessor and lessee.
In another sector, hotels are doing just the opposite. With the downturn of travel and vacations, hotels are struggling to get people in the door. One hotel adapting to this change would be the Hotel Figueroa in Downtown Los Angeles. In an attempt to navigate business through the pandemic, management has turned its rooms to office spaces for individuals and small businesses to rent. Though it may seem unusual, one benefit is that hotel rooms typically come standard with a desk, free-WiFi and a coffee maker – making them a suitable office space.
Other hotels have had the same idea but have decided to go for a more simplistic approach. For example, the Marriott launched a new program called the Marriott Bonvoy Work Anywhere platform. This program offers three packages; a day pass, stay pass or play pass. The main difference between a hotel room and an office would be the bed. Because removal and relocation of beds would be time consuming and costly, instead of changing their rooms to offices, they are hosting events in order to promote the two-for-one deal of these spaces. A Day pass allows for room access from 6:00AM to 6:00PM. Rentable office space with a bed…by the pass. What could possibly go wrong?
A more familiar conversion, condominiums to apartments, has become much more popular during and following the pandemic as well. Because luxury condos have become harder to market and sell, owners are making the switch to long-stay apartments. This shift can be largely attributed to the housing market rising rapidly as well as the lack of funds on the consumer side to facilitate larger purchases. Since apartments don’t require the financial and personal commitment, we can understand why previous condo dwellers may see apartments as the more viable option.
As COVID slowly makes its way out and becomes less prevalent in the world as we know it, its lasting impacts will be noticeable for many years to come. With shifts in the commercial and residential real estate markets comes new ideas, thoughts and experiences that will continue to push boundaries. We look forward to learning, adapting and overcoming in order to Make Brands Work.