Office Best Practices: How to Prepare for a Post-COVID-19 Reality

By Andy Gutman, President, Farbman Group

It’s no hyperbole to acknowledge that we are living in unprecedented times and facing unique and historic challenges. The novel coronavirus pandemic has had a profound impact on the lives and livelihoods of Americans across a wide range of industries, and commercial real estate is no exception.

As brands and businesses struggle to adjust to the slowdown, with many shutting their doors and others making significant operational adjustments, owners and operators face their own dilemmas. How can real estate professionals help their tenants while protecting their own interests? What can they do differently today to start preparing for a post-shutdown new normal once the nation and the economy begin reopening in the months ahead?

Andy Gutman, Farbman Group

What follows is a review of practical tips and best practices that real estate professionals should be deploying to ensure they are doing everything they can to help themselves and their tenants navigate the unfamiliar terrain of a pandemic-altered landscape.

Talk the talk

Communication with tenants is always important. In the current circumstances, however, clear and consistent communication is not just a priority, but an urgent necessity. Make sure your team is connecting on COVID-related changes to tenants, sharing updates on executive orders, new insights and safety protocols, and distributing best practices from public health authorities. Make full use of technology, with eblasts, texting and other digital channels, but recognize that actual phone conversations and face-to-face video calls are invaluable.

It’s important to make sure that connectivity is a priority beyond the executive suite. Staff at all levels should be tasked with ramping up regular “live” communication. Speaking with vendors is also key, not just to protect your own interests, but to potentially design and implement special programs and/or offers for tenants.

Be a resource

Experienced real estate professionals recognize that there is no one-size-fits-all formula when it comes to working with tenants. Every property is different, and every tenant is different. One of the best ways to accommodate those differences is to focus less on mandates and more on helping tenants access the guidance, resources and support they need to make informed and strategic decisions. For example, providing information for direct tenant to government programs that may enable the tenant to defer rent.

A surprising number of tenants don’t even have established banking relationships, and facilitating those connections is likely to be a win-win for real estate professionals. Some owners and operators are even hosting virtual townhall meetings for tenants, bringing in special guests and subject matter experts from inside and outside the organization to give presentations and lead discussions.

Leverage expertise

Look closely at the resources you’ve deployed to generate business and be willing to think outside the box to leverage your expertise in new ways — and for new clients. For example, some real estate professionals are working more closely with lenders to help them conduct the kind of in-depth analysis and appraisals needed to determine the best course of action for an asset.

Be flexible

Some real estate professionals have received literally thousands of letters, calls and emails in the last month alone. Coordinating with lenders and vendors, helping tenants conduct detailed assessments of their financial outlooks and determining what can realistically be done for them going forward feels like an additional full-time job. The reality of the “new world” is that every party, from the tenant to the lender to the vendor, needs to evaluate if and even how they can help.

While many commercial tenants were able to pay April rent — and others had enough of a financial cushion to enable them to meet their obligations for longer — the reality is that some flexibility will be required of all parties as time goes on and the fallout from the pandemic continues. In exchange for breaks on rent or “blend and extend” programs, secure concessions such as removing termination rights or co-tenancy stipulations.

Negotiating with vendors can also pay off. Some vendors may be willing to provide free or reduced-rate services for two to three months free in exchange for the certainty of a guaranteed longer-term deal.

Prepare, project

While specific details about what reopening scenarios will look like remain scarce, it makes sense to plan and prepare now for the operational changes and health and safety measures that will inevitably be a part of post-pandemic operations. Start thinking about signage, spacing, entrances and exits, ways to control traffic, structure offices, managing high-touch points and even controlling elevator access. Have a plan to secure items like hand sanitizer and personal protective equipment (PPE), and think critically about what role tenants can and should play and what is the landlord’s responsibility.

As a landlord, it’s your obligation to keep buildings clean and safe — but not to be the ultimate gatekeeper. Begin reviewing and, if needed, redrafting language about cleaning and security standards for the building’s common areas — knowing where landlord’s responsibilities lie and where tenants’ responsibilities lie.

Understand that cafeterias and conference rooms could be modified greatly over time to allow fewer people in or become revamped into rentable square footage. Consider deals that could be made when reconfiguring those spaces, and potential partnerships (e.g. with a furniture supplier) to make that happen in a cost-effective manner.

Stay focused

A particularly frustrating aspect of the current crisis is that there are so many “unknowns.” Public health professionals, civic leaders and businesses are all flying blind — and learning as they go. The long-term picture is dependent on information we simply don’t have yet.

While there are questions you should be asking (especially about those operational changes outlined above) and tentative plans to be made, future detail remains unclear. With that in mind, it makes sense to make action plans in 90- to 120-day increments.

Stick together

While there’s an understandable tendency to scramble to protect your own assets and interests in a time of crisis, it’s important to recognize that we are all in this together. Landlords, tenants and vendors are all part of the same interconnected ecosystem.

Those who take a hard line and refuse to compromise will likely struggle to retain relationships. Owners, tenants, lenders and vendors committed to working together and engaging in give-and-take will be the ones most likely to not just survive but thrive in the brighter days ahead.

This article was originally written for the June 2020 issue of Heartland Real Estate Business magazine.

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