Now, Next & Beyond: The path forward for reentry into the office space
As the COVID-19 pandemic continues to rewrite the rules of daily life, both personally and professionally, every business must deal with the unprecedented challenges that few of us ever expected. We in commercial real estate need no reminder of the extraordinary times we are currently experiencing. The retail real estate sector remains the most immediately and directly affected economically by the coronavirus pandemic, with April rent collections down on average of 35% – 45%. Compare that with multifamily, industrial and office tenants, where rent collections are around 90%. However, regardless of the sector or market, the future remains uncertain.
Unlike other disruptions where we can point to a specific cause and implement a plan of action, the challenging nature of this new coronavirus, along with its systemic impact on almost everything we do, makes near-term planning a crapshoot. Hence the difficulty in not only containment but in planning just what our “new normal” will look like—particularly for the office environment.
As areas begin to stabilize and stay-at-home restrictions are lifted, businesses will start the process of reopening, reentering and recovery. The path forward for office landlords and occupants can be viewed in three phases: now, next and beyond.
Now
The “now” is what businesses are currently experiencing and how they are reacting to the situation at hand. A recent Gartner, Inc. survey of HR executives found that 88% of organizations have encouraged or required their employees to work from home. Additionally, daily usage of the Zoom meeting platform has increased more than 300% from before the pandemic. Companies are doing whatever it takes to keep their workforce productive and find creative ways to serve their clients and customers. The place and pace in which employees work may have changed, but if you are the CEO, leader or stakeholder of a company, your mind is centered on subsequent steps—what’s next? The social investments we have made and continue to make will determine how long we stay in the “now.”
Next
“Next” as it concerns the reopening of companies is what landlords and employers are focusing on—the “reentry” phase. As we begin to bring workers back into the office, the physical space and social dynamic of the workplace will undoubtedly change. Employers will first have to find a balance between those who don’t yet feel comfortable returning to the office and those who welcome a return.
What near-term solutions will employers and building landlords be required to put in place for the office environment as we transition through the phases of reopening the economy over the next few months? Obviously, the health and wellness of people will be paramount. Staggering schedules of the workforce coming back into the office, so there are fewer employees present at one time, and coming up with creative wayfinding around common areas and office amenities will be needed to address how we meet social distancing guidelines. Reduced touchpoints, cleaning procedures and sanitizing must be enhanced. New guidelines that change how we interact person-to-person with our coworkers and clients, like controlled access and visitor policies, will need to be determined.
Flexibility is going to be a critical factor once we start emerging from uncertainty over the next few weeks. If all goes well, distancing measures will technically be relaxed, but how many of the near-term policies and procedures will become long-term changes to how and where we interact with each other?
Beyond
“Beyond” is an extension of “next.” As “next” is considered near-term, “beyond” is long-term. It is believed that it takes approximately 66 days for a new behavior to become a habit. How many of the near-term policies will become permanent in the office ecosystem? Real estate owners and operators across every asset class are considering the long-term impacts of the coronavirus outbreak and required modifications that these shifts are likely to bring.
For example, the recent trend toward densification of the workspace may change, but the need for social interaction and professional collaboration—in a safe environment—will certainly keep us in the office. This could result in the reintroduction of hard separations between desks or staggered workspaces, plexiglass dividers or cough shields between coworkers, widened corridors, the continued use of Zoom and other teleconference platforms within the office for team meetings, the list goes on as far as space planners and social engineers can imagine.
Various data show that anywhere from 5% – 20% of the workforce that previously operated from company offices will become permanent work-from-home employees, potentially reducing the need for office space. Then again, as distancing and safety become part of our social psyche, and public health codes place occupancy limits on space planning, the employee-per-square-foot ratio will likely increase, producing an uptick in demand for office real estate. The obvious question is, will one offset the other?
Long-term corporate real estate decision-making will likely be put on hold for some time as we reenter the workplace. Fewer organizations are going to feel comfortable signing a 3- or 5-year lease for office space because of the need to maintain as much flexibility as possible. As tenants and landlords shake out how best to accommodate their mutual needs, the opportunity will lie in rethinking office space to make it more accommodating for employees, whether that means more or less square footage.
On the landlord side, owners with patience and enough working capital to endure the short-term volatility and initial stress of the post-pandemic lease-up will emerge the winners. They will maintain a strong presence in urban centers, with updated spaces that meet the “new normal” tenants will seek.
We don’t know what’s going to happen over the next weeks and months; the situation remains fluid and continually evolving. But as more businesses face various phases of now, next and beyond, the need for professional guidance and best practices and protocols will grow. Please contact us to learn more about how we can help you during these next critical steps. Stirling Properties’ advisors are experienced in all aspects of commercial real estate, including retail, office, industrial, healthcare and multifamily sectors.
Stay safe and healthy.
President’s Message: Your urgent help is needed
We are all experiencing the unprecedented ramifications of the COVID-19 pandemic. While the safety and well-being of our people are our highest concerns, many are also struggling with their businesses and livelihoods.
We are just at the beginning stages of difficult times for the retail real estate industry, especially for many of our retailers. Countless restaurants and stores have been forced to close, and others have voluntarily closed, or sales have been greatly diminished. It’s important to note that 1 out of 4 U.S. jobs is related to retail—this will affect you, your friends and family.
We need your help. Congress is currently debating relief efforts for businesses and individuals affected by the COVID-19 crisis. Please contact your elected officials and urge them to provide federal assistance.
ICSC has made it very simple to contact your Congress members and legislators through an easy to use portal – HERE—or copy this url and paste in your web browser: https://p2a.co/65LiaWv. It’s essential to act quickly.
If you have not had a chance to reach out, please take a minute to do so. This legislation is crucial to the retail real estate industry and our companies. The long-term strength of the shopping center industry is critical to the economic, civic and social viability of communities across the country.
Please feel free to share this message with friends, family and like-minded colleagues, and on your social media channels.
ICSC is reporting that our efforts are working…Congress hears us! We need to keep the momentum going. Every voice counts in helping retailers and small businesses get through this crisis.
Thank you,
Marty Mayer
Studer Community Institute (SCI) Building Awarded NAIOP 2019 Rehab/Repurpose Development of the Year
Stirling Properties serves as Property Manager & Broker for the iconic office tower in Pensacola, FL.
The Northwest Florida Chapter of NAIOP, the Commercial Real Estate Development Association, recently presented its 2019 Rehab/Repurpose Development of the Year Award to the Studer Community Institute (SCI) Building in downtown Pensacola, Florida. Home of Studer Community Institute, the SCI Building has completed a dynamic renovation project that includes an upgraded exterior, enhanced common areas, and the addition of a café. Stirling Properties, which provides third-party property management and brokerage services at SCI, submitted the entry on behalf of the owner.
The award-winning project was the redevelopment of the former SunTrust Tower, an iconic 10-story, 96,300-square-foot office building. Having managed and leased the property since 2006, Stirling Properties helped facilitate the sale of the building in 2017 to Quint and Rishy Studer and continued management and leasing assignments under the new ownership.
Built in 1974, the tower’s geometrically shaped structure, outdated building systems and location on the periphery of Pensacola’s CBD presented leasing challenges (nearly 50% vacancy) for the new owners against the changing dynamics of the office market.
Over the course of the 14-month renovation, critical building systems such as HVAC, life safety, elevators and electrical were replaced, as well as upgrades to the roof, common areas, corridors and restrooms. While most of the building remained a multi-tenant office tower, the goal was to build on the uniqueness of the architecture by repurposing the 1st floor and outdoor plaza into a shared community space. These plans centered around the owner’s intent to convert the building into a community center focused on creating dialogue, hosting speaking engagements and events, and creating an open public space for citizens to meet and enjoy downtown Pensacola.
All existing tenants remained in place during construction. To cause as little business disruption as possible, the Property Manager and the General Contractor had to coordinate work on a case by case basis around tenant meeting schedules.
The new SCI Building provides tenants (both former and new) with an enhanced sense of place and ample added amenities. The redevelopment project also fills a niche in the local office product type. It has become a sort of incubator, opening the door for other planned mixed-use projects in the area.
The transformation of the property, along with Stirling Properties’ combined property management and leasing efforts have resulted in improved tenant satisfaction—all tenants have remained, with most having renewed their leases. The building is now at 95% occupancy.
Over the past several months, the University of West Florida’s Center for Cybersecurity has moved from its campus location into 9,948 square feet (SF) of office space at the SCI Building, and Pen Air Federal Credit Union occupied another 3,828 SF in the Atrium. The global engineering firm of Mott MacDonald has renewed its lease and expanded its footprint by 4,364 SF for a total of 21,617 SF. SunTrust Bank’s (now Truist after a merger with BB&T) commercial lending group has occupied 4,406 SF. Most recently, we welcomed the law offices of Morgan & Morgan, which leased 9,432 SF of space on the top floor, and Berkeley Research Group, a global corporate consulting firm, recently signed a lease on 2,305 SF. Stirling Properties’ commercial advisor, Jason Scott, represented the landlord in these lease transactions.
With a full tenant roster, there is little doubt that the building is not only an upgraded version of itself but is now a place where the community can gather—where ideas are formed and implemented.
Congratulations to the Studer Community Institute for this esteemed honor and your leadership and vision in the Pensacola community and surrounding region.
For more information on Stirling Properties’ leasing and property management services, contact Jason Scott at jscott@stirlingprop.com or (850) 418-6792.
Major Renovations Coming to Pan American Life Center in New Orleans’s CBD
Pan American Life Center Lobby Rendering
New cafe and food options, state-of-the-art conference center and upgraded lobby.
Stirling Properties announces major renovations to the Pan American Life Center, a 673,000-square-foot premier office building located at the corner of Poydras Street and St. Charles Avenue in New Orleans, Louisiana. Construction is currently underway for a $7 million redevelopment project that will include a renovated café, state-of-the-art conference center and upgraded ground floor lobby to better position the building in the evolving office landscape. The café and conference center will continue to be managed by Sodexo.
The café-style restaurant will be located on the 11th floor, offering professional food service and enhanced menu options for building tenants, users of the conference center and surrounding customers. The renovation work on the 11th floor will feature a modernized dining area, upgraded furniture, new flooring, LED lighting and an exciting new menu. Construction began in early January and is expected to be complete in the summer of 2020.
Pan American Life Center Cafe Rendering
During the renovation, the existing café is closed; however, a new Café Micro Market has been opened in the lobby on the first floor adjacent to Smoothie King. The Micro Market is open daily, offering hot menu items such as breakfast, soups, salads, grab-and-go sandwiches and gourmet entrees.
A modern state-of-the-art conference center will be constructed on the 11th floor featuring high-tech audio/visual equipment, a tiered-seating auditorium and a variety of attractive catering packages. Following national trends of space utilization and the desire for open, collaborative work environments and flexible seating arrangements, the new conference center will offer multi-purpose meeting space available in various sizes and configurations. Conference room reservations are expected to begin in the second quarter, with the re-opening of the conference center early in the third quarter.
Renovations to the main lobby and building entrance began late last year and are nearing completion. Upgrades include a modernized, inviting lobby with brighter wall finishes, new furniture, LED lighting, renovated restrooms and installation of an electronic directory. Renovation work is expected to be complete just in time for Mardi Gras festivities.
“The renovations underway at the Pan American Life Center will uniquely position the office tower as one of a kind in the New Orleans CBD, offering new and improved amenities for existing and future tenants. These building enhancements will make our workplace more enjoyable, and also attractive in recruiting and retaining employees,” said Jose S. Suquet, Chairman of the Board, President & CEO of Pan-American Life Insurance Group.
“IBERIABANK is looking forward to the upgrades coming to the Pan American Life Center. As a major occupant of the building, we know that these improved amenities, along with the enhanced co-working and common areas, will be a huge benefit to the tenants, our existing and future workforce, and our customers,” said Hunter Hill, New Orleans Market President for IBERIABANK.
“Stirling Properties recognizes the changing office environment. Users want more collaborative, open floor plans, ample amenities and innovative trophy projects. These trends in the commercial industry increase the need for more curated properties,” said Grady Brame, Executive Vice President with Stirling Properties. “This renovation will better position the Pan American Life Center for long-term sustainability. It’s an investment in the future workplace that will make our building more attractive and functional for current tenants and new prospects.”
Pan American Life Center is recognized as one of New Orleans’ most prestigious office towers, boasting high-quality tenants in addition to housing the national and regional headquarters of many premier corporations. Built in 1980, the granite-clad, Class A trophy tower encompasses roughly 673,000 square feet of office and retail space, as well as an eight-story parking structure. Office tenants include Pan American Life Insurance Group, IBERIABANK, Morris Bart Law Offices, McGlinchey Stafford, Merrill Lynch and Stirling Properties. First-floor retail tenants include Smoothie King, Starbucks, Tsunami and IBERIABANK. Stirling Properties’ affiliates own the property and are the exclusive management and leasing agents for the Pan American Life Center.
For more information on the Pan American Life Center, visit www.panam-neworleans.com. For leasing information, contact Gaines Seaman at gseaman@stirlingprop.com or (504) 523-4481.
Dana Inc. Celebrates Grand Opening of New Service & Assembly Center in Slidell, Louisiana
Marks another major milestone in the evolution of Stirling Properties’ development portfolio.
Dana Incorporated (NYSE: DAN) announced that it has opened the doors to its nearly 32,000-square-foot industrial facility at Fremaux Park in Slidell, Louisiana, for the repair, service, and assembly of industrial gearboxes, including the ability to custom-make gears up to 6.5 feet (2 meters).
St. Tammany Parish President Mike Cooper, Slidell Mayor Greg Cromer, Stirling Properties and St. Tammany Parish community leaders joined in the celebration with an official ribbon-cutting ceremony, followed by guided tours of the new facility.
Located in the Fremaux mixed-use development, the new service and assembly center replaces Dana’s current operations in Slidell, offering a larger footprint to meet the growing demand for industrial gearbox service, repair, and refurbishment. The company has also invested in gear grinding and hobbing equipment and skilled personnel to increase the ability to quickly turn-around gearboxes for customers.
“The additional square footage in this new facility combined with the increased ability to rapidly make gears gives Dana the capacity we need to further support our industrial gearbox customers who come to us for custom, highly engineered solutions,” said Aziz Aghili, president of Dana’s Off-Highway Drive and Motion Technologies. “Dana’s service and assembly centers provide critical support for our global customers throughout the lifecycle of their machinery, whether they’re building something completely new for a one-off application or maintaining current equipment to ensure maximum performance and uptime.”
“Just over a year ago, we broke ground on this project. It’s incredible that we’ve got a world-class manufacturing and assembly operation that has invested this amount of time, money and energy into the Slidell community. Dana has the capacity to double its workforce in the next year or so and double the size of this facility in the next 4-5 years! The world is their oyster, and we’re opening our world to them—welcome. Thank you for choosing to be a part of Slidell, investing in our community and helping to make our city the best that it can be,” said Slidell Mayor Cromer.
“On behalf of St. Tammany Parish, we welcome Dana to your new home here in Slidell. When you moved to our area, you may not have known you would grow so fast in such a short time. With an opportunity to move and expand, we’re glad you chose to stay in Slidell,” said Parish President Cooper. “I’d also like to thank the commitment of Stirling Properties and the Levis Family, for your vision of this development—Fremaux Park will help us attract not only companies like Dana but other corporate entities to our community.”
Stirling Properties served as the developer of the new Slidell facility. This project marks the company’s first ground-up industrial development, as well as the beginning of industrial expansion efforts for the Fremaux mixed-use property. Stirling Properties’ commercial advisor, Bradley Cook, also worked with Dana to identify and secure the location at the corner of Town Center Parkway and Old Spanish Trail.
“Stirling Properties is thrilled to officially welcome Dana to Fremaux Park and celebrate the grand opening of this remarkable facility,” said Townsend Underhill, President of Development with Stirling Properties. “This is a huge economic win for Slidell and the surrounding greater New Orleans region, and we are proud to have been a part of it. This new service and assembly center will be a unique operation nationally—and the property was laid out with ample opportunities to allow for future expansion. We look forward to working with Dana and having them as an anchor tenant in the Fremaux Park development.”
In addition to the Slidell facility, Dana has 26 service and assembly centers around the world that provide custom solutions for gearboxes used in a variety of applications such as mining, steel and metal, pulp and paper, power generation, food processing, marine, cement, wind power, water treatment and much more. The company employs more than 36,000 people in 33 countries across six continents.
Fremaux Park is part of the roughly 350-acre regional mixed-use development located at the southwest corner of Interstate 10 and Fremaux Avenue in Slidell, Louisiana. It includes Retreat at Fremaux Town Center luxury residential apartments, Springhill Suites by Marriott (under construction), Waypoint apartment community (under construction), Saltgrass Steak House and Dana Inc. Service & Assembly Center. The adjoining Fremaux Town Center, anchored by Dillard’s, Dick’s Sporting Goods, Kohl’s and Best Buy, includes more than 650,000 square feet of retail and restaurant options. Additional phases are forthcoming with added residential, retail, industrial and office park. Stirling Properties developed Fremaux Park and Fremaux Town Center and handles management and leasing of the property.
For leasing or sales information, contact Ryan Pécot at 337.572.0246 / rpecot@stirlingprop.com or Bradley Cook at 985.246.3720 / bcook@stirlingprop.com.
Chuckles Comedy House Coming to Oakwood Center in Gretna, Louisiana
Marks third national location for new entertainment concept.
Stirling Properties announced that Chuckles Comedy House is coming to Oakwood Center (formerly Oakwood Mall) in Gretna, Louisiana, a part of the New Orleans metropolitan area. This marks the third national location for the new-to-market entertainment concept.
Chuckles Comedy House will occupy 9,855 square feet of retail space located at 197 Westbank Expressway, adjacent to New Orleans Hamburger & Seafood Co. The company is currently finalizing construction plans and is expected to open in the fall of 2020. Chuckles Comedy House features regional and national comedians, as well as a full bar and pub-style fare. Comedians like Paul Mooney, DL Hughley, Monique, Eddie Griffin, Chris Tucker, Bruce Bruce, and more have graced its stage. Chuckles Comedy House currently operates two additional locations in Memphis, Tennessee, and Jackson, Mississippi.
“Chuckles Comedy House was created to fill a void in the entertainment industry. At Chuckles, we know comedy, we know excitement, we know a good time,” said Darvis Harvey, COO of Chuckles Comedy House, New Orleans. “We are thrilled to have the opportunity to bring our exclusive concept to the Gretna community and surrounding New Orleans area, and give the people something we all love, laughter—all year round!”
“We are excited to be able to open our third Chuckles Comedy House in Gretna, and to establish a potential flagship location for our brand here in the greater New Orleans area,” said Michael Ware, Sr., CEO & Founder of Chuckles Comedy House. “We have always had a deep, personal love for the New Orleans region—visiting many times over the years—and we look forward to finally being a part of this vibrant, fun-loving community.”
Stirling Properties’ Senior Advisor Joe Gardner, CCIM represented Chuckles Comedy House in securing the lease and serves as the company’s tenant representative broker. Joe Brown, with Brookfield Properties, represented the property owner in the transaction.
“Stirling Properties is excited to welcome Chuckles Comedy House—the first of its kind in our area—to Oakwood Center and the Gretna community. Today’s consumers want entertainment and unique experiences, and we are confident this innovative concept will be a welcomed and successful addition to the greater New Orleans region, and will greatly complement the surrounding retail and restaurant establishments,” said Gardner.
Oakwood Center is a 907,145-square-foot shopping center located at the foot of the Crescent City Connection, which links the West Bank to downtown New Orleans and the historic French Quarter. The center offers a dynamic shopping experience, with a retail lineup including department stores such as Dillard’s and JCPenney alongside ALDO, Bath & Body Works, H&M, ULTA BEAUTY and more than 80 other retail and restaurant options, as well as a 380-seat foot court and children’s soft play area.
A big round of applause for this year’s CID Award […]
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