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Office landlords confront tenants rethinking real estate needs

Hudson Yards (Credit: KPF)

As the global recession deepens and companies brace for the new normal that follows, business will require less space than pre-Covid. In 4,767 global earnings calls between July 21 and Dec. 8, about one in eight machine-generated transcripts revealed that firms were rethinking their real estate needs, with many on track to save millions of dollars in the process, Bloomberg News reported.

  • Worth Noting: An October survey by the U.K.’s Institute of Directors found that 74% of companies planned to make more use of working from home once the pandemic subsides, with more than half intending to reduce the amount of workspace they use.
  • The fear: While the coronavirus vaccine has thrilled investors worldwide and sent real estate stocks rebounding, celebrations may turn out to be premature. The kind of changes that officials have been discussing have often been of a permanent and structural nature, with the forecast savings being largely welcomed by company shareholders and analysts, Bloomberg noted.
  • Heard on the Street: Adrian Benedict, Head of Real-estate solutions at Fidelity International told Bloomberg: “That’s the key rationale for buying real estate. Most landlords are in effect pension and insurance funds and ultimately that’s who is going to be paying for it,” said Adrian Benedict, head of real-estate solutions at Fidelity International in London. “If the whole central tenet of security of income is undermined through this crisis, you are storing up a world of trouble.” [Bloomberg]

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