How teleworking after the pandemic could affect the Arlington real estate market

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Some federal agencies are looking to maintain remote and hybrid work options for employees in the aftermath of the pandemic – a shift that could affect Arlington’s office and residential real estate market.

The Biden administration expects White House staff to return to work full-time. in Julybut government agencies are due to receive guidance on continuing hybrid options for some federal employees this month. Distant work may become a permanent option for some federal employees, as is the case with many private sector workers

“I think the office market will cool off as companies continue to assess what telecommuting means for their workforce and space needs over the next few years,” he said. Eric Maribojok, executive director of the Center for Real Estate Entrepreneurship at George Mason University.

Arlington has a significant federal presence despite Base restructuring and closure lawduring which the office space occupied by the military was relocated. Experience taught the district a few lessons about diversifying its economic base, which means that Arlington, gearing up for more remote work today, is in a different boat than it was in 2005 in the face of BRAC.

Those familiar with market trends in the district say there will be repercussions, but they are likely to be held back by a more diverse economy, a trend towards hybrid options that involve some time in offices, and a constant need for personal work between certain agencies and large organizations. … technology companies.

“Many companies are just starting to plan for a potential return to the office, and discussions of a completely distant future are still largely speculative,” said Kirby Clarke, spokeswoman for Arlington Economic Development. “We expect companies to continue to offer the flexibility to work remotely in the next phase of recovery. However, we hear from many of our major employers that there is no substitute for personal collaboration in the office, especially in the science-intensive industries of science and technology. “

Arlington Federal Labor

While it took time, Arlington saw a significant reduction in federal office space.

Federal office space in Arlington fell from 11.4 million square feet to 6.3 million square feet from 2003 to April 2021, according to the company. AED report and GSA.gov Lease Inventory

Arlington today has 29,200 federal employees, excluding the military, and is home to a number of agencies, including the State Department, the US Marshals Service, the Environmental Protection Agency and the Drug Enforcement Agency, Clark said.

However, some former government tenants have been replaced by corporate, technology and research anchors and a lot more housing. Arlington added 5,193 housing units between 2016 and 2020, she said, of which 3,175 are under construction and 5,907 are planned for the future.

“Over the past ten years, the landscape of Arlington Urban villages is transforming, becoming more economically diverse and more balanced in land use, with residential developments replacing old, outdated office space previously occupied by federal tenants, ”Clark said.

DC has the second largest pool of potential remote workers in the country at 49%, after the San Francisco Bay Area at 50%, according to a February report. Greater Washington Partnership… The northern half of Arlington has one of the highest concentrations of remote workers, along with parts of the Northwest District of Columbia and the Bethesda and Potomac districts in Montgomery County.

Report released ahead of news of a change in federal work from home rules first reported, predicted that some of the greatest advances in telecommuting after the pandemic are likely to be in government positions.

“Two out of five federal government employees can spend some time at home, and a minority of state and local public sector professionals work remotely,” the report says.

Among civil servants, Clark and Maribozhok said, these opportunities are likely to be expanded for those who undertake individual tasks that require focus but not high levels of clearance.

“Due to the presence of the Pentagon and other defense and security agencies in Arlington, many tenants supporting the federal government have security requirements that may require physical office space or proximity to major government and defense anchors,” Clarke said.

If even more federal government employees leave entirely remotely – a conversation that Clarke says is still largely speculative – she predicted it would be “a problem not limited to Arlington and could have broader concerns in the future. regional implications ”.

Hybrid options are more likely to expand

The report expects that there will be more hybrid variants after the pandemic than completely removed. The study showed that 24 to 28% of the region’s employees who can work remotely will work remotely at least once a week, and 14-18% will work from three to five days a week.

Since most telecommuting workers divide their time between home and office, a flexible workspace will be in great demand– said Maribozhok. Two new coworking spaces opened in Arlington this year, one in the courthouse and another in the crystal cityand the third malfunction

“The office environment should be designed to accommodate people who spend two to three days working from home without hindrance,” he said. “Flexible collaboration space is back in demand, with survivors like WeWork reporting demand has returned to pre-pandemic levels. Viewing office space as a service rather than a tangible asset began before the pandemic and will return. “

However, there will be several companies in Arlington with employees who work primarily in collaborative teams who will need to maintain or expand their office space.

“Amazon, for example, has continued to lease office space as planned before the pandemic and is continuing to design its new office towers in Arlington,” he said. “Other tech tenants like Microsoft have also announced major new offices.”

Stability in real estate

Maribozhok said the residential real estate market will experience fewer shocks.

“There will be some housing migration to lower-rent apartment markets as there is less of a burden to commute to work as working from home several days a week,” he said. “However, distance from the workplace is only one aspect of deciding where to rent. Pedestrian-friendly social facilities such as bars, restaurants, parks, sports and concert venues, especially for young workers, are important even when working from home. ”

According to the Greater Washington study, this appears to be true in general for the District of Columbia, which is not experiencing large-scale migration of remote workers from the region. Rather, the existing data suggests significant movement within the region.

To save remote workers looking for more space in D.C., according to Maribozhok, apartment buildings will need more space for people to work comfortably remotely, and D.C. will need to expand plexuses and smaller apartment buildings.

“[These options] nearby or in traditionally low-density single-family neighborhoods can offer these missing features and provide residents with a wider choice of housing at lower prices than detached private homes, ”he said.

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