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The impact of the COVID-19 pandemic continues to unfold globally. The rapid pace at which the pandemic is spreading, and the global actions taken to reduce it, are having an unprecedented impact on the way we live and do business.
Since the second week of March, when COVID-19 was first declared a pandemic, spreading globally and across the United States, some business models have suffered.
The pandemic threw the real-estate world into disarray, as people emptied out of offices, hotels, and malls and worked from their homes.
This disruption has transformed how people and companies finance, operate, and occupy real estate. To adapt, some companies have quickly changed the way they do business and allowed remote employment but with that comes vacant offices and a blow to the real estate world.
Enter the Tech Giants
According to the Wall Street Journal, Amazon, Facebook, Apple, Microsoft and Google’s parent company Alphabet now collectively own about 589 million square feet of U.S. real estate.
With their large appetite for warehouses, data centers, and retail stores, Tech Giants have expanded in the Commercial Real Estate space by more than 25%. While the demand for physical stores and office spaces are dropping, the demand for the Tech Giant’s data centers that power online shopping and warehouses that facilitate quick delivery, have grown exponentially.
They eye distressed properties, like big-box stores and malls, that can be converted for industrial use. Which brings us to our home state of Alabama.
Just recently news was announced that Amazon plans to build a 200,000-square-foot distribution center in Birmingham atop the weathered remains of the once bustling Century Plaza.
The plan will add thousands of jobs and greatly boost the economy. A hometown micro example of the macro effect of the Tech Giant’s technological innovation and outreach.
Elsewhere in The Big Apple, Facebook has just leased enough new office space to nearly triple Manhattan’s current local workforce, including at one of the city’s most iconic buildings, the 107-year-old former main post office complex near Pennsylvania Station.
Apple is also expanding to another building in Manhattan as well Google and Amazon, who are stitching together corporate campuses in the city more quickly than anywhere else in the world.
Amazon paid roughly $1 billion in March for the iconic Lord & Taylor building on Fifth Avenue. The Giant’s soaring real-estate demand has been very beneficial for cities and towns across America and their arrival usually brings an influx of well-paid employees and fills the city’s pockets with property-tax revenue.
Their presence also has positive effects like helping boost retail, restaurant and other businesses as well. While other industries expanded aggressively in the past, such as financial services in the early 1980s or manufacturing companies in the 1960s, brokers say there is no precedent for Tech Giant’s impact on property markets, especially today during the COVID-19 pandemic.
We Will Recover
With companies quickly trying to adapt to their ever-changing circumstances the future landscape of Commercial Real Estate may be uncertain.
But one thing is certain, although the pandemic may have an impact on how future buildings are built and how business is conducted – the construction industry will go on. Throughout history, buildings have stood as a representation of society, reflecting our values, successes, and even our downfalls such as the pandemic.
Eventually business as usual will be restored and we will have learned something very valuable from this experience. Every sector of business will perhaps operate a little differently, but we will operate.
Only time will tell the real impact of the pandemic, how it will reformat the way we live, do business and build things.
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