Developers Need To Realize COVID-19 Is Here To Stay

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In an interesting new adaptation to COVID-19, the hard-hit AMC theater chain is now offering moviegoers a new experience: Rent out an entire theater for just $99. AMC has taken a brutal revenue hit due to the outbreak, and consequently is searching for new ways to drive income during the pandemic. Offering people an opportunity to ensure social distancing for themselves and their family or close friends while getting back to the movies, something that many people have taken a break on since the start of the outbreak, seems like a great idea for AMC. It also hints at the extent to which businesses of all sorts have had to rethink their operations to match the needs of a world with COVID-19. Another area where this is increasingly obvious is the realm of real estate development. 

Ground-up development is seeing all new considerations and challenges appear thanks to the outbreak. Interestingly, there is still plenty of activity going on in the field. Multifamily construction starts in August were down almost 23 percent from their July level, but that was itself a bit of a high point, up almost 79 percent from the true bottom of the trough in April. Instead of stopping, it seems, development has continued, with some notable adjustments. 

Some of these adjustments are obvious. More private lounge spaces, investments in access control software, and attention to how delivery people will enter the building are all low-hanging fruit. But some options are more impactful and less obvious. “Because of Covid, we’ve thought a lot more about stairs,” said Arden Hearing, the west coast executive general manager for Lendlease, a major developer. “To encourage residents to use them, and decrease elevator density, the project will now have stairs that are wider and carpeted, with art and natural light.” Staircases might be an afterthought for many residents and even many developers, but the realities of COVID-19 mean that no attention to detail can be spared in spaces where people will be in close contact. 

There’s another reality to new multifamily construction here, as well. The nature of the outbreak, posing a bigger danger to larger groups and spaces with many people, has put a greater emphasis on smaller, more intimate amenity spaces as well as features at the unit-level, as opposed to the community level. Take for example one of Lendlease’s properties in San Francisco, an in-development condo high rise. The property has seen a revision of its amenity plan toward smaller, more specialized separate spaces, like a cooking space and an art space, that will limit the number of people in each one at any given time. 

In general, spaces throughout planned buildings are being tweaked much like existing offices and apartments, with dividers popping up to separate rooms into discrete areas and help keep people apart in amenity areas like cabanas and co-working spaces. But it isn’t sufficient to just make minor adjustments and hope it is enough. Instead, some amenities that were once offered at the community level need to be brought into the units themselves. Longer term, it’s likely that shared co-working spaces, for instance, may shrink while space allocated for in-unit offices, whether in the form of an extra bedroom or specially designated office space, will grow. This may be more than just a temporary solution. Instead, it may well be simply the way of the future, since once this generation of multifamily properties start offering attractive amenities like in-unit offices, it will be difficult for the old style of apartments to compete.

Real estate visionaries are already imagining what these new rental units will look like. “The home office will be the new walk in closet,” said David Heart, CEO of Steinberg Hart, a full service architecture firm. Mr. Heart believes that by asking our apartments to play double duty as an office, we will need to have furnishings that can adapt. “My prediction is that we will see built-in furniture again,” he said. “Murphy beds or closet beds allow for more convertablity and usability, they take up less space and are more versatile than the furniture you buy. Think about a boat or a camper trailer, the precision of design from a use standpoint is a much higher level than buying a standard piece of furniture or an empty space.” New apartments may come with incentives like high-quality microphones and webcams, or desk spaces built into nooks and corners to allow multiple people in the same household to get on Zoom calls at the same time, without interfering with each other’s volume. This could put negative pressure on demand for 1-bedroom units, as renters come to seek private spaces for work and calls separate from their bedroom or living room. 

There are other adaptations we may see, as well. Common area amenity spaces may morph into new forms and layouts that can be enjoyed separately, but together. This is more than just sticking plexiglass barriers in between seating areas or lounge spaces. Instead, imagine completely separate rooms, like office phone booths, equipped with widescreen TVs and HD cameras for Zoom use, or podcast recording studios, or even game rooms fitted with an Xbox or Playstation. Spaces like this could be completely separate but use a lot of glass and other transparent elements to provide a social ambiance while keeping people safe. 

As many of us have learned, Zoom is good for social situations too, and not just business ones. In the future, perhaps people’s lives will have a video call continuously on in the background during at-home R&R hours, allowing friends or family a window into their living rooms both safely and conveniently. Developers need to be ready to build these societal changes into their development plans. Apartments as a whole may not be as popular two or three years from now as they have been in the last decade. Not only are we seeing pronounced interest in the suburbs, but the specter of pandemics will likely continue to linger over the sector. If this is true then apartments will have to compete with their single family counterparts, making the decisions developers are making now even more important.

Most developers are likely reluctant to change their plans, figuratively and literally, for a disease that could end any day. We are all cautiously optimistic about a vaccine but we all might have to face the harsh reality that even if COVID-19 does go away, we will likely face another pandemic. Matthew Baylis is an epidemiologist at the University of Liverpool who said it best when he explained, “In the last 20 years, we’ve had six significant threats: SARS, MERS, Ebola, avian influenza, and swine flu. We dodged five bullets but the sixth got us. And this is not the last pandemic we are going to face.”

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