June 11, 2020 – Although leasing transactions have largely paused since the beginning of the pandemic, commercial real estate analysts are already predicting the sector could experience a ‘pandemic sprawl.’

As commercial offices begin to reopen in Maryland, employers are facing the challenges of how to adapt existing space to meet COVID-19 protocols and how to address employees’ concerns about safety and altered childcare needs.

“The other challenge is how do you physically get people to the office,” said Chuck Breitenother, Principal at KLNB. “For people who take public transportation to an office in a city center, that is a little more scary than getting into your own car and driving to an office in suburbia. We have read that more urban companies may be setting up satellite offices close to where their employees live.”

In its forecast of “Tenant Needs in a Post-Pandemic World,” JLL reported “several companies are already exploring dual-hub solutions to accommodate both urban and suburban locations.”

Numerous business analysts, architects and CRE thought leaders have suggested that corporate headquarters may take on new functions in the current climate. Instead of being large, centralized activity centers, they may become the center of a company’s culture and the location of key meetings and select functions. But other operations would be dispersed among smaller, suburban offices.

Moody’s Analytics also recently predicted that more companies may seek to lease suburban office space “not too far” from their central business district. That trend could also drive demand for office space in suburban transit-oriented developments — locations that would enable workers to drive to their normal office but ride transit to urban headquarters for select meetings or shifts.

Echoing predictions of a pandemic sprawl, UBS anticipated that newer, more environmentally sustainable buildings would likely attract more of that migration and be positioned to command strong lease prices.

Analysts, however, caution this could be a short-lived trend as many companies and individuals express desires to return to their normal work styles once an effective vaccine is developed for COVID-19.

“I do see some benefits to suburban in the short term, but in the long term I do see people reverting to the urban core,” Spencer Levy, Senior Economic Advisor for CBRE, said in an interview with CNBC.