CREJ

Page 2 — Office Properties Quarterly — September 2020 www.crej.com Contents Letter from the Editor A s one of many Coloradans still working from home, I was curious what this issue’s collection of industry experts would say about the market outlook. As we prepare for print, I’ve learned several things.The main take- away is that no one believes the office will go away. In fact, people agree that office space is necessary for creating company culture and fostering creativ- ity and collabora- tion. However, the traditional belief of work occurring only at the office, Mon- day through Friday, 8 a.m. to 5 p.m., is probably in for a major overhaul. The pandemic highlighted the need for flexibility, something that many employees were already requesting. When the majority of office work- ers quickly adapted to a remote-work scenario, collectively we learned that working from home is possible – but, as many authors point out, just because it’s possible doesn’t mean it’s ideal. Yet, anecdotally, the conveniences of working from home have made an impression on many – to the point that is seems difficult to imagine everyone going back into the office full-time. Instead, COVID-19 may have shifted the office environment forever into something more fluid. Several authors call for a hybrid approach, in which work is done in the office as well as remotely. This appreciation for flexibility cre- ates opportunities for the office mar- ket. As remote work has shown, the freedom to work from anywhere allows companies to consider the dollars they spend on office space.While this may hurt some properties, it also presents opportunities for enticing out-of-state companies that may no longer see the point in paying top dollar for coastal markets when their employees or executives would be happy here.This is especially true for the tech industry, as Matt Harbert writes on Page 8. In these hybrid scenarios, space requirements will change. Hub-and- spoke models have long been used by national companies, and Colorado will continue to benefit from these models. Some authors propose that we may see this type of model for local companies as well, with smaller offices spread across the metro.This presents oppor- tunities for coworking spaces to entice larger companies that need ancillary space near employees’ homes. One thing that seems clear is that while office requirements will undergo some sort of adjustment period, the market’s strength prepandemic will help Colorado post-pandemic. None of the elements that contributed to record success before March have disappeared.These attributes – the young and highly educated popula- tion, a well-balanced economy that’s not dependent on any one industry, an appreciation for a work-life-play bal- ance and the natural environment to support it, and the relative affordability compared to coastal markets – are not intrinsically changed due to the pan- demic. So while many office users still are limited to 50% capacity, it won’t last forever, and Colorado was in as good of a position prepandemic as one could have hoped. Michelle Z. Askeland maskeland@crej.com 303-623-1148, Ext.104 Flexibility reigns supreme 4 6 8 8 10 10 12 12 14 14 16 16 18 18 20 20 Midyear update: The state of office financing Mark Jeffries Optimism about Colorado Springs office market Greg Phaneuf and Peter Scoville How tech moves forward in the wake of COVID-19 Matt Harbert Market snapshot: Tenant considerations for office Andy Cullen Consider a small-format office investment strategy Corey Sandberg 2020 election: 1031 exchange on the chopping block? Jeremy Reeves Health, safety take center stage with new initiatives Stephanie Lawrence Evolving spaces: Changes to design & operations David Haltom The 21st century office will never be the same Zain Jaffer Market sees greater emphasis on flexible spaces Cara Stamp Coworking: It is here to stay or time to vacate? Will Fehr How flex space will impact future workspaces Grant Barnhill Landlord improvements uncertain in current market Tia Jenkins Facade modernization’s role in repositioning assets Brandon Andow Policy provisions for vacant & unoccupied spaces R. Scott deLuise Considerations to help elevate a property’s value Dan Meitus