YOUNGSTOWN, Ohio – Large numbers of employees still work from home because of the coronavirus pandemic. But area real estate professionals report that hasn’t translated into a wave of office downsizings locally.
Early on, the pandemic forced many white-collar employees to establish offices at home and to use teleconferencing platforms such as Zoom and GoToMeeting to remain productive. Many businesses still have employees working from home.
A Stanford University study shows 42% of U.S. workers are now working from home full time. That’s up from the 3.6% who were working from home either full time or part time in 2018, according to a Global Workplace Analytics study.
“Certainly the rumblings are there,” says Don Thomas, managing partner of Platz Realty Group, Canfield, “but we haven’t seen it come to fruition yet.”
That’s mostly because office space is leased from three to five years. So getting out of such leases is going to be difficult, according to Thomas.
“The subject of office space comes up all the time. But it came up before COVID,” he says.
Productivity “always has been an issue” with work-at-home spaces, he says. In fact, he reports he just got off the phone with a client who is going to lease space in downtown Youngstown. Earlier, he had sold his property and moved his office to his home.
“He had enough of the interruptions. We’ve had a pretty good run with regard to offices adding over the last two months,” Thomas says.
“I know that it’s happening nationally,” says Alan Friedkin, broker associate with Burgan Friedkin Commercial Group, referring to downsizing.
So far, Friedkin isn’t seeing requests for less office space here, although, he says, he has “some decent office space available.”
Friedkin says he’s been dealing mostly with bricks-and-mortar commercial space.
“We’re seeing a few deals coming right now. I have some properties that are under contract. There are some companies that are still looking to come into our market,” he says.
There is plenty of inventory, says Bob Collins, a commercial real estate agent with the Berkshire Hathaway office in Hermitage, Pa.
“We’re getting a lot of listings for office space,” he says. “If someone wants office space right now, I can show them a lot of options.”
Available spaces include traditional office space as well as medical offices, Collins says. Even before the pandemic, people were discovering that they could easily work at home. That has “just multiplied,” he observes.
Collins points to an agent in his office with three children, all of whom are employed by Fortune 500 companies and working from home.
“So when the wealthiest, strongest companies in the country have people working from home, what do you think regular companies are going to do? They’re going to do the same thing,” he says.
Collins is marketing individual office spaces in a building at the LindenPointe Innovative Business Campus. He’s targeting businesspeople who need smaller professional spaces to meet clients plus access to a meeting room that is shared among the tenants. Marketing office spaces that way improves the chances of signing leases more than trying to lease the entire building to a single owner.
“That’s going to be more of a trend,” he predicts.
Jim Grantz, broker associate with Edward J. Lewis Inc., Youngstown, hasn’t seen much in terms of office deal flow. But activity in other sectors has been good, he says.
“I have seen a few deals get put on hold. There were things that were nearing completion when the stay-at-home orders came down. And then the companies – two of which were medical – put things on hold,” Grantz says.
Further into the pandemic, some began to question whether they would need to do business in a different way, making them more skittish, he continues.
“Now projects that were supposed to happen this year have been pushed to 2021. And I don’t know what the outcome will be. Frankly, the tenants don’t know either,” he says. “The nature of their business is affected by the pandemic and until we see the light at the end of the tunnel, I think it’s going to be a wait-and-see period.”
As for retail space, “Anything with a glass storefront is difficult right now,” Platz’s Thomas says. To generate activity, he has cut the rates on some long-term projects and is taking a different approach to leasing larger spaces, including subdividing them for flex office and warehouse space.
“Industrial real estate never slowed down,” Grantz says. “I wish I had more inventory. I’m seeing people that need expansion space and I don’t have anywhere to get it.”
John Horvath, sales associate with the commercial division of Berkshire Hathaway HomeServices Northwood Realty Services in Poland, says he sees an active light industrial market.
“We’ve seen a consistent inventory out there,” Horvath says. “There is no shortage of space and there’s not a glut. It’s just ticking along normally. It hasn’t been hit hard like the retail market and the office market. Light industrial seems to be motoring along.”
Clients are looking for larger spaces and to expand into this market, according to Horvath. Among his clients are a Butler, Pa., company that is looking to come into the area and a manufacturer in Columbiana County that wants to triple its space.
Warehouse space slowed down before the pandemic but calls are beginning to pick up in that sector, Collins says.
“One of the industries that’s hurting is the restaurant market,” Friedkin says. “We represent a few restaurants right now that are temporarily closed and we don’t know if they’re going to reopen or not.”
Grantz reports he has done several leases for fast-casual restaurants in the Youngstown-Warren and western Pennsylvania markets. Those include Wok It Out, which will open a second restaurant at Starr Centre Drive in Canfield and a restaurant that will lease a former Taco Bell in Warren.
In addition, Grantz completed a lease for a Pita Pit franchise in Akron and a Domino’s Pizza shop in Chippewa, Pa.
Collins reports he has some prospects looking at restaurants but most of the interest lies in properties for wineries.
“We still get some people contacting us about restaurants but no one is pulling the plug right now” with restaurants being able to operate only at limited capacity because of the pandemic, he says. “But the interest is out there.”
Platz remains confident about long-term prospects. Even now, both local businesses and companies from outside the area are considering projects in this market.
“The underpinnings of the economy going into the virus were so good – the best economy in my life,” he says.