I was getting ready for work the other morning and was watching CNBC. They were broadcasting from the World Economic Forum in Davos, Switzerland. As I was wishing that I was there, not as a participant but skiing, I started listening to the interview they were doing.
They were talking with the Chairman & CEO of Coca Cola, Muhtar Kent. The discussion was about putting young people to work and what large corporations could do about that. I can certainly appreciate that now that I have two twenty year olds in the work force.
The discussion turned to what Coca Cola was doing with some of their call centers. He discussed how they are letting more and more of their call center employees to work from home. As employee wouldn’t that be great? You could work in sweat pants. No commute to work. No cube to work in for 8 hours a day.
It sounded great till I put my real estate brokerage hat on. What does this mean for commercial real estate? Real estate owners love call centers. They are usually quite large, often a 100,000 square feet or larger, take very little build out in the way of private offices and usually the tenants have great credit like Coca Cola.
But what happens to the office market, which is already experiencing higher vacancy than we would like, when other companies follow suit? It doesn’t take long for 100,000 feet here and 100,000 feet there add up to a raise in office vacancy.
How do those spaces get re-leased? Certainly it’s going to further slowdown new office construction.
Being in commercial real estate for 30 years, I have seen many trends come and go. The one that I am most interested in is the commercial office market in the 21st century and how I feel it is going to continue to evolve, change and morph into something different than we are used to.