PODCAST—What will “normal” look like
post-COVID?

James Cook: [00:00:00] When do things get back to normal? Well, my guest today says that's not the right question because in the property world, things may never return to the way they once were. But he says that's not actually thing.

 This is building places where we look at the world of commercial real estate through the eyes of the experts that study it every day. My name is James Cook. I research real estate for JLL today. I'm talking with Christian bed one. He's a fellow researcher at JLL, and he's just held the new report called vision 2021.

Christian Beaudoin: [00:00:37] My name is Christian Baldwin, director of research for JLL.

James Cook: [00:00:40] Christian, you've been spending a lot of time thinking about the coming year for all types of commercial real estate when do things get back to normal?

Christian Beaudoin: [00:00:49] After a lot of research and a lot of analysis and executive interviews, we've determined that we are likely never getting back to normal or at least what we considered normal back in February 2020. However, I think that presents us all with a huge opportunity to consider what was working well and what wasn't last year and to make things better going forward.

 By way of example. It was considered normal in an office for many people to come in 50 or 60 hours a week and work in places that they considered loud dense impersonal and unproductive. It was considered normal for employees to commute over 90 minutes, each way to desk jobs that they didn't necessarily love.

And to be stuck in traffic for significant portion of their lives. It was considered normal for professionals to come in when they were sick, because they felt like they had to be present to appear productive. It was considered normal for people to cram into very tight workspaces that didn't really have any focus on privacy or wellness or health.

all those things we used to think were normal. Maybe warrant. Exactly. Ideal.

James Cook: [00:01:42] What does the new normal look like for an office worker?

Christian Beaudoin: [00:01:46] it will be normal to focus on health and wellness in the workplace to have spaces for privacy, spaces for quiet individual thought. And I think buildings that focus on health and wellness for their occupants and tenants will have a leg up over more commodity buildings in the market. Those buildings that focus. On the employee experience and making sure that people feel safe, protected well and healthy throughout their daily journey to the office and in the office we'll certainly have advantage over the others in the market.

 Also, there's a lot of debate or there was in 2020 around cities versus suburbs, right? And our downtown core is better. Or our suburban office is better. We're encouraging people to end that debate and to really recognize that the real question is how much space and where both the city and the suburbs can offer the right solution for the right people. It's just really understanding your people and where they need to work, where they can work most productively. Those are two big things, geographic analysis that we can do to make things better.

And then physical analysis of the actual spaces

James Cook: [00:02:42] Any amount of time in the car in my future that you can reduce for me would be fantastic. So I love that vision.

Christian Beaudoin: [00:02:52] Yeah and that idea of saving time and increasing convenience also spills into other parts of our report. So we focused on retail and industrial. And on that side, the convenience that consumers have gained now through e-commerce and doorstep delivery and, curbside pickup.

Those trends are not going away, even in a post pandemic environment. I think so many of us have gotten used to the conveniences of online ordering next day delivery or sometimes even same day delivery that we're going to be in that environment for quite some time to come.

 I think that's another way. We'll be moving better than normal in 2021.

James Cook: [00:03:26] I know the, the retail portion of the report is something that, um, I helped work on a little bit and. I feel like the consumer, just to your point, has new table stakes in terms of convenience you know, if I want something, I should be able to see the inventory at all my local stores on my computer.

 There's no longer that idea that I need to go to the store and look for it. Like I should know in advance if they have what I want. So that's a new expectation and some retailers have really got it down. And I think others are still trying to figure it out.

Christian Beaudoin: [00:04:00] I think you're absolutely right. The way we phrased it. Or you phrased that really in the report is that convenience is everything and I think it's a factor that we won't be able to go back to where we were before and retailers essentially obligated to figure out this new environment.

With that said, though, there's another element of retail. We need to take the long view in terms of experiential retail, which has a real opportunity to, to come back. You know, convenience is key right now.

However, people are still really missing. The aspect of going to some stores touching and feeling the merchandise, really taking, shopping as an experience or taking dining as an experience.

James Cook: [00:04:32] There's this expectation now that when people feel safe, there's sort of going to be this just running out and having all the fun with other humans in social settings that they haven't been having.

 So , um, when that happens is a little up in the air, but I mean, looking at the latest , um, you know, vaccine Rollout numbers. It seems like that happens late summer of 2021, but whenever it does, um, yeah, yeah, we expect a return to the malls or expect to return to the bars and the downtown shopping districts.

Um, and the movie theaters Okay. So we talk about where they where the people shop, how about they live? Um, is there any change in say apartment buildings?

Christian Beaudoin: [00:05:19] Yeah, absolutely. You know, we think there's, there's a huge opportunity, right? And the multi housing and single family housing space to make that better in 2021 as well. First, think about it geographically, right? Uh, in 2020 and prior, you had to live pretty far away from downtown urban centers to have somewhere affordable, to live, right.

That is something we can change going forward, right? The focus on affordable housing and workforce housing and what I like to call regular people, housing absolutely needs to be a critical focus of real estate investors and developers over the coming years. It may be one of the largest challenges or most important issues in real estate over the next decade.

So that's one opportunity. We have to make things better. Secondly, if you just take the, the apartments that we have in the market and the housing units we have in the market, People are expecting more from their homes now, right? As we've all been working from home, primarily working from home, uh, over the last 10 to 12 months, there is a greater expectation for the functionality of a home.

And even though that's true of a small apartment, so looking for, um, spaces that have workspaces embedded within them, Quiet spaces to take phone calls separate from roommates or family members. These kinds of things becoming a critical search function for those who are looking for housing now going forward.

 So it's much like the office space, both geographically and physically. I think we can improve our living situations in 2021.

James Cook: [00:06:36] Yeah, absolutely. I mean, you know, I never thought about needing things like, soundproofing and, and, and, you know, high quality business level internet, all, all in my home before it was just sort of a, you know, you know, an afterthought working out of that spare bedroom, which is now my primary workplace. you're absolutely right. You're not alone in that sentiment. And you can imagine, you know, people who have lived in very dense and small compressed urban location then has spent most of the time outside of their apartment. It was okay to have a small studio in Manhattan. If you spend most of your time at work and then out with friends, But now when you're really in that unit, you expect more of that unit.

Yeah, that's a great point. I mean, no wonder that so many Manhattanites we're going and staying with family out of the city to escape those tiny little city apartments. I know one of the things a lot, a lot of companies have focused on, in the past year or so is about sustainability, climate change , and contributing to the reduction of climate change.

Is there an expectation that companies in 2021 are going to be focusing more on that?

Christian Beaudoin: [00:07:40] There absolutely is. I don't think it's really a choice now to focus on sustainability and resilience. I think if anything is. The pandemic has shown us, that you have to invest for the long term in your real estate properties. so yes, there is an absolutely an expectation in terms of sustainability that, both companies.

And the investors. So landlords, are focused on the long-term durability of their properties and also their impact on the environment. I just don't think there's any going back from that. And addition, you know, we have a section in our paper called leading better in 2021. It focuses not only on sustainability, but also the opportunity that exists in the commercial real estate world in terms of diversity and inclusion. If you think again, back to 2020 and before. It was considered normal to have limited diversity in the commercial real estate space. I don't think that's accessible going forward. I think we can do better.

James Cook: [00:08:26] that's a great point. I think that there are a lot of people who looked around in the. The business of commercial real estate and said, boy, this is very, but what are you going to do? And now there is this real expectation that, you know, everybody has to do something around diversity recruiting awareness.

So yeah, in that sense, I feel really positive. Yeah. About, you know, about the future for the business.

Christian Beaudoin: [00:08:52] I you too. feel like we're actually seeing real and substantive change, you know, within JLL and with many of our client and peer organizations, uh, for the first time in a long time. And so it's , uh, it's exciting to see the momentum that we have and. The greatest opportunity is the diversity of ideas that you get when you invite more people around the table and you just get a sense of , um, opportunities , uh, for business, for society for all of us to work together.

So it's, it's like, it's exciting to see.

James Cook: [00:09:19] Okay, so we talked about retail, but what about, um, all of the industrial and manufacturing that gets all those goods to the retail stores? Any changes in those buildings?

Christian Beaudoin: [00:09:31] Yeah. Great question. So there is a huge opportunity in the industrial space as well in the physical buildings of industrial. I think often we think of industrial site selection as just where's the best location. Right. But the physical space actually matters more as well.

Um, the more and more, uh, that we all migrate to online consumption, online orders. There are really essential workers who were working in industrial buildings. And I think their real estate should reflect how essential they are. There's been an amenities, arms race in the office world. Now for over a decade in terms of.

Adding gym and health facilities and the rooftop bars and amenities and restaurants. We need to think of the industrial spaces , uh, as buildings that deserve such attention as well, to have wellness facilities , uh, quiet spaces, breakout spaces, cafeteria that are , uh, attractive and interesting health and workout spaces.

James Cook: [00:10:19] you need those amenities for recruiting as you know, more and more. Goods are manufactured and shipped and manufactured and shipped and online. There's more of a demand for workers in these industrial spaces. And, you know, if you want to woo them, I mean, you got to pay them more money, but you know, it's great to give them the kinds of amenities that office workers get.

Christian Beaudoin: [00:10:40] that's right. So I think, you know, employee and worker conditions and real estate can conditions can improve across all sides of commercial real estate, uh, going forward. So that's the opportunity we have.

James Cook: [00:10:49] Awesome. Well, Christian, I want to thank you so much for joining me. If folks want to get a copy of this report, it's called better than normal vision 2021, and they can find it at jll.com.

Christian Beaudoin: [00:11:02] Absolutely. Thanks, James.

James Cook: [00:11:04] Have a good one. We'll talk again soon.

Christian Beaudoin: [00:11:06] Thank you.

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