Office space and hotels will regain their strength more quickly than generally believed after the coronavirus pandemic ebbs, according to the CEOs for two of the most recognizable companies in commercial real estate.
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Brookfield Asset Management CEO Bruce Flatt and Walker & Dunlop CEO Willy Walker made their predictions about the battered sectors to different media outlets. Flatt, who oversees a company with more than 500M SF of commercial space under management, told the Financial Post that workers will re-embrace offices as soon as it is safe to do so, and shoppers will return in force to malls as well.
“In business and life there are always problems and having a personal connection with others helps you work through those situations," Flatt said. "That’s why office spaces are important."
Earlier this month, BAM made an offer to take Brookfield Property Partners, its real estate arm, private via an offering of $16.50 per share for every share the company doesn't already own. The deal is valued at $5.9B.
“The privatization will allow us to have greater flexibility in operating the portfolio and realizing the intrinsic value of BPY’s high-quality assets," BAM Chief Financial Officer Nick Goodman said in a statement.
Separately, Walker told Yahoo Finance that business travel will surge back as soon as it is safe to travel because there is no substitute for meeting in person — even with widely embraced platforms like Zoom available.
"A lot of people said the overnight business trip to go win a deal or meet with a recruit or meet with your team is a thing of the past," Walker said. "I could not disagree with that more. ... I think it snaps back very, very, very much quicker than most people are projecting."
"Most people" includes Microsoft founder Bill Gates, who predicted late last year that the pandemic had permanently marred business travel and office usage.
"My prediction would be that over 50% of business travel and over 30% of days in the office will go away," Gates told The New York Times in November.
The stakes are high as business travel supports a large chunk of the economy. In 2019, business travel spending totaled $334.2B, according to the U.S. Travel Association. In 2020, the total for business travel dropped to $141B.
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