Are companies planning their real estate projects differently?

Real estate professionals and occupiers of business premises are asking themselves not only about the return to the office and the reception of their employees but also their future real estate projects. How then will the office building of tomorrow look? Which criteria must now be taken into account when searching for business premises? What effect will the health and social distancing measures have on the office? Understandably, all of these questions are now included in the company specifications when looking for new business premises. BNP Paribas Real Estate surveyed a sample of its clients in order to work towards getting some answers. Learn more about the initial results from the survey of our occupiers of business premises who had to face Covid-19.

The first quarter recorded a significant fall in the volume of transactions in Europe to -28% compared to Q1 2019, 2.34M m2. Nevertheless, it is worth noting that that the take up had already started slowing down in 2019 in most European markets and that this downturn was expected to be even more noticeable in Q2 and Q3 2020.

However, most deals that were supposed to be signed in the first quarter were closed. The transactions which were supposed to be concluded in Q2 and Q3 were suspended or cancelled even though some big projects are still underway. This is true of most of the European market and will have a significant effect on leasing in 2020 which could see a fall by 41%. These findings were confirmed in the study conducted by BNP Paribas Real Estate “Occupiers of business premises faced with Covid-19,” with 44% of the occupiers surveyed admitted to having postponed their real estate projects and 8% to having cancelled them.

Some markets seem to have been less affected than others, for example Germany. The impact on the office real estate market will, in reality, depend on the speed with which market activity can resume.
France seems to be on the right path since out of those surveyed, 27% confirm that they have projects still on the go.
 

In the short and long-term, companies have had to adapt in order to ensure the safety not only of their employees but also of their clients. Aside from the purely health aspect, they have been working tirelessly to make health and safety their priority, and to show the importance of the human aspect in making their decisions. At the end of the health crisis and the lockdown measures being eased, many have turned to the Property Manager in order to establish new routines on their premises, whether it be concerning circulation and flow, communication, measures to adopt or the implementation of additional services.
 

Considerations which seem to have been turned upside down in light of the health crisis, particularly with the implementation of widespread remote working during this period. A practice which is expected to become commonplace over the next few months and which will change the real estate market forever. The flexibility of spaces and leases are certainly likely to become more available so that the occupiers can consolidate their projects safely. Legal adjustments will be essential in order to ease the current regulations.

[METHODOLOGY]
This recent study was conducted by the BNP Paribas Real Estate teams from a sample of 157 occupiers, for the period of the 12th to the 26th of May 2020. These companies, business premises occupiers were mainly asked about the layout of their business premises, their real estate projects and their relationships with landlords and property managers. Out of the 157 people who answered our online questionnaire, 45 were CEOs/Directors, 30 were Managers, 20 were Building Managers and 15 were Administrative or Financial Directors. The others included Communications Directors, Logistics Directors, General Service Managers, Human Resource Managers, Purchasing Directors, Commercial Directors, Consultants, Commercial/Direction Assistants and Asset Managers.