At the beginning of 2020, Los Angeles office space was dominated by tech and entertainment/media companies paying record high rents. But exactly how much will the metro’s office market change through this pandemic. In this blog post, Los Angeles area office tenant improvement contractors H.W. Holmes, Inc. look at a few things we’re hearing from the landlords, tenants, and offce leasing agents we’ve talked to.
It’s All About Office Space Utilization These Days
Tenant to tenant will have different needs once things reopen. Even as companies gradually welcome workers back into offices, many employees will still work remote much of the time. Many companies who wanted spacious open offices just last year will be downsizing. Either because they’ve let go of many employees or because they now realize much of their staff can be just as productive working remote.
Many tenants may try to get out of their leases. Short-term renewals may also need to be offered if a lease expires during this time. Many companies will be hesitant to sign a long-term lease right now until they see how this all plays out.
But most will need some type of office tenant improvements or build-out prior to reopening. The main issue at hand is aligning with guidelines mandated by state government and those issued by the Centers for Disease Control and Prevention (CDC). You first and foremost need to keep employees and guests safe. This means social distancing has to be accommodated. Spaces can’t be increasingly populated with workers shoulder to shoulder. Employees will be need to spread out. Does your existing layout allow for this? It’s a matter of determining how to get more value from your existing space.
Safety has now become a critical component for any landlord trying to land or keep a tenant.
Office Leasing Prices Will Go Down
Office leasing rents are already being reduced. Tenants are also being offered better financial concessions. These concessions may come in the form of tenant improvement allowances, higher rent abatement allocations, and parking relief. Longer-term leases being offered may also give the tenant termination rights for those companies uneasy about the current state of their business or the economy.
The Type of Spaces Being Sought Out May Change
Prior to COVID-19, creative collaborative spaces with walkable amenities were in the highest demand. These spaces aren’t as appealing right now because they don’t allow for much social distancing.
At the moment, smaller more campus-style projects are what’s in the highest demand in and around the Los Angles metro area.
It’s important for tenants and landlords to communicate in these times. Both may need to adapt from what they were doing prior to COVID-19. This is a time to be open-minded, realistic, and accommodating. It’s completely possible to come to something mutually acceptable that better positions all parties for events such as this pandemic moving forward. It just takes communication.
HAVE A LOS ANGELES TENANT IMPROVEMENT PROJECT?
H.W. Holmes, Inc. are Los Angeles area tenant improvement contractors committed to helping landlords and tenants get the most from their space. Contact us today if you’d like to discuss an office buildout or remodel in the Los Angeles metropolitan area.