Special Report: Cities, Real Estate And The COVID-19 Vaccination 

Don't Expect The COVID-19 Vaccine To Start A Rush Back To The Office

With the arrival of a coronavirus vaccine on the horizon, many in commercial real estate have already begun to plan for life after the pandemic. But the period between now and then will be especially murky for office real estate.

The continuing rise in cases, hospitalizations and deaths nationwide is preventing anyone from piloting protocols that could at least allow more density of workers in offices without a vaccine.

Current models project there to be a months-long gap between when the majority of the population will be allowed to receive a vaccine and when its distribution will be widespread enough for people to gather without social distancing or enhanced hygiene measures.

“In the spring or perhaps even sooner, if it were the case that infections and hospitalizations were declining and we were back to a point that the U.S. was at in July or August, there could be a little more of a push to get back to the office, but it doesn’t seem likely considering where we are today,” MetLife Investment Management Head of Real Estate Research and Strategy William Pattison said.

For any employer claiming that the health and safety of its employees are paramount, having so little information will likely deal a blow to any return-to-work timelines. Anyone with a stake in the office real estate market will be rooting for the quickest possible rollout of a vaccine and for everyone able to receive it to consent to doing so. How much an employer or office landlord can do to proactively make it happen seems just as uncertain as anything else.

“I just think people feel that until the vaccine is available at scale, for most owners and occupants, it’s a difficult thing to plan for in the abstract,” Ballard Spahr Real Estate partner Michael Ostermeyer said.

Opinions of U.S. companies’ tolerance for remote work vary, but the consensus seems to be that it will remain a greater part of the average worker’s life on a permanent basis. Because so many jobs are still getting done, some may see little downside in simply waiting until pandemic conditions dissipate before attempting any meaningful return to the office, vaccine or otherwise. As of October, only 10% to 15% of office seats were occupied, according to JLL research, and conditions have only worsened since then.

“We have no intention of even being together for several months, and I would imagine that when we do go back into an office, it will probably be voluntary and will have the strictest of protocols,” RealtyMogul Chief Investment Officer Chris Fraley said. “If everyone in the office has been vaccinated, we can obviously ease up on those.”

Many companies whose leases expired this year either signed short-term extensions to put off making a long-term decision, reflected in a 39% year-over-year decrease in leasing activity and an increase in renewals as a percentage of overall leases in the third quarter, according to CBRE's quarterly report. But for those who had to decide between fishing or cutting bait, tenants seemed to choose the latter option. The U.S. office market experienced 33.5M SF of negative absorption in the third quarter, the largest negative figure since 2001. 

Unlike with mask-wearing and limiting common area capacities, landlords and property managers likely won’t be able to require workers in their office buildings to prove they’ve been vaccinated in order to enter, multiple sources told Bisnow

“People just have to figure it out with their tenants, so most haven’t set policies yet,” Building Owners and Managers Association President and Chief Operating Officer Henry Chamberlain said.

In some parts of the country where leading public figures have taken stances against heavy restrictions, office properties are more likely to allow more workers even before things improve. In general, attitudes in office buildings have reflected the way local politicians have dealt with the pandemic; 90% of the negative absorption in Q3 was in California and in the urban coastal markets from Boston to Washington, D.C., markets where strict lockdowns have been imposed, the CBRE report found.

“I hear of companies mandating that their employees be present in person every day; I’ve heard that there have been lenient mask requirements in some offices,” Fraley said. “Sadly, look at our own Congress as an example.”

Just as many suspect the expansion of remote work to be somewhat permanent, the treatment of office space is not likely to track exactly with local restrictions. No landlord wants to be the outlier for standards and practices in a market.

“It’s going to take some time because the landlord community tends to follow community standards, rather than legal standards, even in locations determined by statewide or municipal mandates,” Ostermeyer said. “Even once they’re eased, I imagine landlords will be fairly cautious about it.”

Perhaps even more than landlords, employees of some companies may take longer to come back to the office than is strictly necessary. A lack of trust in government could cast doubt on the effectiveness and/or safety of the vaccine — some workers could be reluctant to get vaccinated because they’re more cavalier than epidemiologists would like, and some will fall on the opposite end of the spectrum.

“We’ve all been through some trauma, and there’s a certain psychology against large group meetings now,” Fraley said. “Some of our employees live with their elderly parents, and a lot of the vaccines might only be 95% effective. For someone that’s worried about infecting their elderly parents, that may be too high for their risk tolerance.”

Employers who are motivated to get their workers back could plausibly offer incentives for vaccination. Some of the biggest, like automaker Ford and Tyson Foods, are planning to secure some doses of the vaccine for their employees when available, The Washington Post reported.

When vaccines are fully approved by the Food and Drug Administration, beyond the emergency use exemption under which they will initially be distributed, then some employers may have the legal standing on which to require employees to be vaccinated, the Post reported. If a company doesn’t have the muscle to either obtain or mandate vaccines when the time comes, landlords or property managers could potentially assist.

“If [landlords] can act as distribution center[s] in their own space, I can see some of that,” BOMA's Chamberlain said. “And it will be up to health authorities how much they want to control that, whether allowing visiting nurses to administer it or making the environment more restricted.”

Even before the pandemic, landlords had begun to see health care as a possible amenity offering, whether by placing some related usage in the ground-floor retail space or offering more specific services themselves. Plenty of office owners and managers have distributed the flu vaccine in their buildings in previous years, Chamberlain said.

Because the pandemic has revealed how much work can be done outside of an office, any question of how aggressively to either push the vaccine or bring employees back does not carry as much urgency as it does for the industrial operations of Ford and Tyson.

“If the risk was similar to industrial, where you can’t produce anything without it, then you’d have more landlords taking that perspective,” said Cove CEO Adam Segal, whose company provides tech-based solutions for workspace and office real estate issues. “I don’t know if it makes sense for landlords to set up the complex infrastructure required for vaccine storage if their buildings aren’t designed for it.”

The question of vaccine distribution will be moot until the average office worker is allowed to receive one, which is likely to be months after it starts to be distributed to health care workers and high-risk individuals. While that may only extend the pressure office users nearing the end of their lease will feel to make decisions amid uncertainty, that could also give them time to think through why they want their workers back and for what?

“When you combine those questions of why do I go to an office and when, it becomes, ‘What’s [the office’s] role in the organization?’” Segal said. “So it becomes an opportunity to be a key resource for bringing people together. Suddenly, [offices] have an opportunity to have more of a hotel-type feeling in the sense that everyone is looking forward to everyone being there on those days, and the culture could organize around it.”

CORRECTION, DEC. 10, 11:15 A.M. ET: A previous version of this article misstated the name of William Pattison's company. This article has been updated.