By Bill Wichert Law360 (August 14, 2020, 9:24 PM EDT)
The dark clouds hovering over the economy have produced an unlikely glimmer of hope for New Jersey’s struggling suburban office market as the health risks posed by the coronavirus encourage businesses to look beyond crowded New York City, experts say.
With workers fearful of taking mass transit and either riding in packed elevators or enduring long waits to reach top floors because of social distancing, companies may explore setting up offices in the Garden State suburbs, potentially boosting a struggling market that has seen tremendous vacancies while employers have gravitated toward urban areas.
“That sort of plain vanilla box in the suburbs, where you can drive to it in your automobile cocoon, get out and then walk up the stairs … sounds a little bit more attractive today than it did just five months ago,” said Rutgers University professor James W. Hughes, former dean of Rutgers’ Edward J. Bloustein School of Planning and Public Policy.
The impact on suburban office complexes amid the pandemic “all depends on how companies are going to be restructured, redefining themselves, how they’re going to set up their work templates and the like going forward,” Hughes said.
Jeffrey L. Heller, New Jersey managing director at commercial real estate services firm Avison Young, cautioned that the idea of the outbreak spurring businesses to head to the state’s suburbs is at this point only a “narrative.” There’s no trend or factual information that “would demonstrate this migration outward,” Heller said.
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Yet there are “building blocks out there which would lead into the narrative,” he said.
Among those factors, companies are considering the “hub and spoke” model, which would involve a hub office in New York City, a smaller office in the New Jersey suburbs and similar outposts in other parts of the region, Heller said. Employees would be able to work from home and drop into those small offices on an occasional basis.
“Where there’s smoke, there’s fire. People are talking about the hub and spoke,” Heller said. “That wasn’t discussed previous to COVID. … It’s good to have at least the concept out there and people talking about it.”
Having smaller hubs also could save on time spent commuting between New York City and New Jersey, Hughes said.
“It may be optimal in terms of total productivity if you do have hubs, smaller hubs in New Jersey where people can cluster together once or twice a week on a staggered basis,” Hughes said.
Another positive sign for New Jersey’s suburban office market is the robust amount of residential sales in the suburbs during the pandemic.
