In the wake of an economic recession caused by the current health crisis, a number of industries are hurting, and commercial real estate hasn’t been immune.
In fact, a forecast survey conducted by Allen Matkins and UCLA Anderson found that California’s commercial real estate could be negatively affected by the pandemic through 2023, with “uniform pessimism and a drop in sentiment” from developers across all sectors.
Yet, business leaders in the Santa Clarita Valley aren’t so sure, many of whom are confident that while some sectors may be down, others have been able to rebound.
“Certain sectors of the commercial real estate market were negatively impacted, but some industries are flourishing,” said Yair Haimoff, executive managing director at Spectrum Commercial Real Estate Inc. “April and May were the scariest months, but in June our activity went up quite a bit.”
While the retail sector has certainly seen an impact, as many of these businesses have been closed through the pandemic, Haimoff said he’s seen very little impact in the industrial and medical sectors.
Ivan Volschenk, managing partner at Evolve Business Strategies, which manages the SCV Chamber of Commerce, agreed, pointing out a number of companies that have recently announced their move to the local area, including Amazon, which recently finalized not one, but two commercial leases, along with Riedel Communications, which is moving its North American headquarters to Santa Clarita.
“As a result of thoughtful, long-term growth and development planning across the Santa Clarita Valley, we are well-situated to weather this recession and come out of the pandemic with the wind at our backs,” Volschenk added. “There is no doubt that this crisis is changing the way businesses are looking at the workplace, and that working from home will be more prominent — but companies and their employees will still have a need for in-person work, and experiences that create a company culture that employees want as part of their careers.”
While the survey participants said they see office market demand decreasing due to work-from-home policies, Haimoff actually has heard firsthand from numerous companies that say telework just wasn’t the best option.
“What’s going to happen is the layouts will be different,” he said, adding that instead of congregated workspaces, he believes offices will opt for more separation between cubicles, leading to leasing larger office spaces, not smaller.
Holly Schroeder, president and CEO of the SCV Economic Development Corp., echoed Haimoff’s sentiments, adding, “There’s a tremendous amount of uncertainty right now about whether the behavior patterns that people are adopting are permanent or temporary changes.
“These changes have happened so fast,” she added. “Some say we made technology adoption changes that people thought were going to take five years in 30 to 90 days. … We don’t know how that plays out over time for the workforce. My personal view is that the physical office and the collaboration and interaction that comes from having workers together, and the communication that comes from that, is not dead.”