Editor’s note: Our reality is virtual

TRD NATIONAL TRD ISSUE /
Jun.June 16, 2020 01:00 PM

Stuart Elliott

A few weekends ago, sheltering in place from the coronavirus, witnessing the looting in cities amid peaceful protests and watching the first manned commercial spaceflight in history, I thought how future generations would probably look back on those few days as historic.

While seemingly disparate, the thread that runs through those events, that undergirds them all, is technology.

Staring at our screens for most of our waking hours, the transformations of our lives wrought by tech are already a given. But the extent to which tech is shaping our life, and the real estate we live and work in, is even more profound than we realize. Everything traces back to it.

The outrage over George Floyd’s death — and the ability to highlight police misconduct in general — have only been possible because it has been caught on video, because everyone has a smartphone these days.

More broadly, everything in our society, from businesses to schools to supply chains of basic goods, has been able to keep functioning during a pandemic thanks to technology. Even Congress has changed its centuries-long protocols to meet the digital age. Imagine if the crisis had happened 25 years ago, with no widespread internet or cell phones.

“I think the structural change is more related to Zoom than the virus in the long run,” Jonathan Miller, co-founder of appraisal firm Miller Samuel, notes in one of our stories this month.

And beyond the technology it creates, Big Tech now looks likely to reshape our cities with its own real estate decisions and work-from-home policies.

Our biggest articles this month focus on these trends. Check out our cover package examining the social unrest in New York, Los Angeles, Miami and elsewhere, and what it all means for some of the country’s biggest real estate markets as they begin to reopen.

And a series of stories on what the office sector will look like post-coronavirus explores whether recent announcements from Facebook and other tech giants will hobble markets in New York and Silicon Valley, cause a temporary blip, or something in between.

As reporter Eddie Small writes, Facebook’s announcement that many of its nearly 50,000 employees can work from home indefinitely has rattled office landlords and brokers. The decision, which Mark Zuckerberg made public in late May, echoed similar messages from Twitter and Shopify.

On the flip side, Twitter has said it doesn’t have plans to shrink its offices. And newcomer TikTok signed a lease for more than 230,000 square feet last month — Manhattan’s first six-figure office lease since the virus hit.

Regardless of the depth of the impact, it seems clear that a new world order for real estate is emerging, which will revolve less around geography and more around one’s online community. In the process, markets in places like New York City, San Francisco and Los Angeles could warp, bending but not breaking.

And the suburbs and exurbs of big cities will likely benefit. If you are going to the office less frequently, and can work during the whole commute, then maybe Hartford or New Haven, for example, will effectively become suburbs of New York.

Meanwhile, some employees sick of working next to their unmade bed won’t be able to wait to get back to the office, while others will want to move to the country and telecommute forever. It’s going to be a world revolving around a different axis. And some parts of real estate may have to be rethought down to the studs if the trend holds.

Elsewhere in the issue, we have an interview with Brian Kingston, CEO of Brookfield Property Partners, New York’s biggest commercial landlord and part of a global behemoth, about the firm’s $5 billion relief plan for the struggling retail sector. And last but not least, embattled co-working company WeWork was in trouble before the virus hit — we look at the odds for recovery following the pandemic. There’s that and a lot more.

Stay safe and enjoy the issue.


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