Real estate after the virus

From McKinsey:

Reimagining the office and work life after COVID-19

Rent, capital costs, facilities operations, maintenance, and management make real estate the largest cost category outside of compensation for many organizations. In our experience, it often amounts to 10 to 20 percent of total personnel-driven expenditures.

Companies have tried to control these costs by fitting more people into less space. This cannot continue in n era where social distancing prevails.

Even the Pandemic Can t Kill the Open-Plan Office

Even before coronavirus, many workers hated the open-plan office. Now that shared work spaces are a public health risk, employers are rethinking office design.

So what now?

Will firms pay higher rents to add space to their urban offices?

Or do they look to move their offices to suburbs where space is cheaper?

Perhaps the lockdown will turn out to be a inflection point and companies will move away from the whole idea of an office as a mere warehouse for employees.

The answer to these questions has profound consequences for cities. Much of their tax base is commercial real estate.