Markets

How Telework May Affect Arlington’s Workplace and Actual Property Markets

Some federal companies wish to proceed distant and hybrid working choices for workers post-pandemic — a shift with potential impacts on Arlington’s workplace and residential actual property markets.

The Biden administration is anticipating White Home workers to return for full-time, in-person work in July, however this month, authorities companies are slated to obtain steering on continued hybrid choices for some federal staff. Distant work might change into a everlasting choice for some federal employees, simply as is occurring for a lot of private-sector employees.

“I believe the workplace market will cool as corporations proceed to evaluate what the distant work shift means for his or her workforce and area wants within the subsequent few years,” stated Eric Maribojoc, the chief director of the Middle for Actual Property Entrepreneurship at George Mason College.

Arlington has a large federal presence regardless of the Base Realignment and Closure Act, which noticed the relocation of military-occupied workplace area. The expertise taught the county some classes about diversifying its financial base, which means Arlington right now, making ready for extra telework, is in a special boat than in 2005 going through BRAC.

These acquainted with the county’s market developments say there will probably be impacts however they are going to doubtless be tempered by a extra numerous economic system, a pattern towards hybrid choices that contain a while in places of work, and a continued want for in-person work amongst sure companies and huge tech corporations.

“Many corporations are simply starting to plan for his or her potential return to the workplace and discussing a completely distant future remains to be largely speculative,” Arlington Financial Improvement spokeswoman Kirby Clark stated. “We anticipate corporations will proceed to supply telework flexibility throughout this subsequent stage of restoration. Nonetheless, we hear from a lot of our main employers that there isn’t a substitute for in-person collaboration within the workplace, particularly for knowledge-based science and know-how industries.”

Arlington’s federal workforce   

Though it took some time, Arlington did expertise a major drop in federally-occupied workplace area.

From 2003 to April 2021, Arlington’s federal workplace area dropped from 11.4 million sq. ft to six.3 million sq. ft, in line with an AED report and the GSA.gov Lease Stock.

Right this moment Arlington has 29,200 federal staff — excluding army personnel — and is residence to the places of work of quite a few companies, together with the State Division, U.S. Marshals Service, the Environmental Safety Company and the Drug Enforcement Company, Clark stated.

Some former authorities tenants have been changed with company, tech and analysis anchors and much more housing, nevertheless. Between 2016 and 2020, Arlington added 5,193 housing items, with 3,175 items below development and 5,907 items deliberate for future development, she stated.

“During the last ten years, the panorama of Arlington’s City Villages reworked, changing into extra economically numerous and land-use balanced, with residential growth changing previous, out of date workplace areas previously occupied by federal tenants,” stated Clark.

As a area, D.C. has the nation’s second-largest pool of potential distant employees, at 49%, behind the San Francisco Bay Space, at 50%, in line with a February report from the Better Washington Partnership. The northern half of Arlington has one of many highest concentrations of remote-capable employees, alongside parts of Northwest D.C. and the Bethesda and Potomac areas of Montgomery County.

The report, which got here out earlier than the information of the altering federal work-from-home tips was first reported, predicted that a few of the largest positive factors in distant work post-pandemic will doubtless be amongst authorities jobs.

“Two in 5 federal authorities employees might spend a while at residence, with smaller shares of state and native public-sector professionals working remotely,” the report stated.

Amongst authorities staff, in line with Clark and Maribojoc, these choices will doubtless be expanded for many who carry out particular person duties that require focus however not excessive ranges of safety clearance.

“As a result of presence of the Pentagon and different protection and safety companies in Arlington, many federal-supporting tenants have safety necessities that will require bodily workplace areas or proximity to main authorities and protection anchors,” Clark famous.

If extra federal authorities staff go totally distant — a dialog that Clark stated remains to be largely speculative — she predicted that it could be “a problem not restricted to Arlington and has the potential for broader regional impacts sooner or later.”

Hybrid choices extra prone to develop  

Put up-pandemic, the report anticipates there will probably be extra hybrid choices than totally distant choices. Between 24-28% of the area’s remote-capable workforce will probably be distant at the least as soon as per week and 14-18% will probably be distant three to 5 days per week, the examine predicted.

With the vast majority of teleworkers dividing their time between residence and an workplace atmosphere, versatile working areas will probably be in excessive demand, Maribojoc stated. This yr, two new co-working areas launched in Arlington, one in Courthouse and one other in Crystal Metropolis, whereas a 3rd shut down.

“Workplace environments will should be designed to seamlessly accommodate individuals who spend two to 3 days working from residence,” he stated. “Versatile co-working area has change into in demand once more, with surviving corporations like WeWork reporting demand returning to pre-pandemic ranges. Viewing workplace area as a service as an alternative of a tough asset had begun earlier than the pandemic and can return.”

Nonetheless, Arlington has corporations with staff who predominantly work in collaborative groups, necessitating that they keep or develop their workplace areas.

“Amazon, for instance, has continued to lease workplace area as scheduled earlier than the pandemic and is shifting ahead with designing their new workplace towers in Arlington,” Maribojoc stated. “Different tech tenants reminiscent of Microsoft have additionally introduced main new workplace leases.”

Stability in actual property

Maribojoc stated the residential actual property market will doubtless really feel fewer shocks on the dimensions of these felt elsewhere in the course of the pandemic.

“There will probably be some residential migration to condo markets with decrease rents as commuting to 1’s office turns into much less of a burden with working from residence a number of days per week,” he stated. “Nonetheless, distance from the office is just one facet of a call on the place to lease. Notably amongst youthful employees, walkable social facilities reminiscent of bars, eating places, parks, sports activities and live performance venues are necessary even when working from residence.”

That seems to be true typically within the D.C. space, which isn’t experiencing a large-scale migration of teleworkers out of the area, in line with the Better Washington examine. Fairly, the examine suggests numerous motion throughout the area.

In an effort to retain some teleworkers throughout the quick D.C. space, Maribojoc stated condo buildings might want to supply more room so individuals can work remotely comfortably, whereas the county might want to develop choices for constructing plexes and smaller condo buildings.

“[These options] close to or in historically low-density single-family neighborhoods can supply these lacking options and supply extra housing selections from residents at costs decrease than these of indifferent single-family homes,” he stated.

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