How Will COVID-19 Impact Office Space Rentals and Usage? https://t.co/S9RAFd04V2
— Nathan K Smith (@AustinTenantAdv) March 29, 2020
from Twitter https://twitter.com/AustinTenantAdv
Sunday, March 29, 2020
How Will COVID-19 Impact Office Space Rentals and Usage? https://t.co/S9RAFd04V2
from Twitter https://twitter.com/AustinTenantAdv
How Will COVID-19 Impact Office Space Rentals and Usage? https://t.co/LZAdbLDNHK https://t.co/YeNcbVYPhV
How Will COVID-19 Impact Office Space Rentals and Usage? https://t.co/LZAdbLDNHK pic.twitter.com/YeNcbVYPhV
— Nathan K Smith (@AustinTenantAdv) March 29, 2020
from Twitter https://twitter.com/AustinTenantAdv
How Will COVID-19 Impact Office Space Rentals and Usage?
There are a lot of opinions about how people will use office space post COVID-19. At the end of the day this is uncharted territory for us all. Nobody really knows how companies will use office space after all of this dies down, however they are entitled to their own opinions. Below are some guesses to ponder as we work through this. As you can see more people think office space usage will decrease as a result of COVID-19
Office Space Usage Decrease
- Office space won’t be used as much
- Companies will use less space and will encourage more remote working.
- Office space will be used more for only holding meetings and having a home base to meet up.
- Even before COVID-19 plenty of successful companies of all sizes were fully remote.
- Technology will change to make us feel more in the presence of others when working remotely.
- The COVID-19 quarantine has forced businesses to work remotely thus giving them the opportunity to realize that there is no reason for employees to drive to the office everyday or hop on a plan for every little meeting. Also they realize it’s possible to train people remotely then having to have them fly out to the company head quarters.
- Companies who once told employees it wasn’t possible to accommodate work from home will lose every disability accommodate battle going forward. With COVID forcing WFH everyone will see that it is possible.
- Some Fortune 500 companies are already talking about not going back to the office for the unforeseen future.
- Business will lease smaller office space square footage for the extroverts that want to socialize more. Introverts will still be allowed to WFH.
- In person meetings will decrease and more focus on only having meetings when absolutely necessary.
- In person meetings will be reserved for team building, fixing problems, and having fun.
- When a company grows to more than 5 people the norm will be 80% work from home or from their preferred coworking facility, and the remaining work from the office. Then meet periodically for live peer to peer experiences 5-10 days per month for 5 hours each time.
- Decision makers will realize how little office space they truly need. The number of remote workers will increase.
- If COVID-19 hasn’t taught us that needing an office is completely unnecessary then we aren’t learning the right lessons.
- So much time will be saved in not having to find a phone booth for private calls or being late for a meeting because the conference room was used by a group that did not reserve it.
- Some people predict companies will realize they don’t need as many employees than they have. More downsizing will occur more than working from home.
- Remote working will increase however many employees will struggle with it. How people adapt to this will determine their success.
- This is going to be a seismic rift that will take years to get back to normal.
- More remote working means companies have a larger talent pool to choose from.
- This will be the ultimate experiment and the anti-open office space trend.
- Lot’s of companies will realize how much money they are wasting on office space and how much time their employees wast driving to and from the office. If companies can learn how to manage at home workers they will see a huge boost in productivity.
- Cubicle farm will be the thing of the past.
- Major companies are telling their employees that they probably won’t have everyone work in the office after COVID-19.
Office Space Usage Will Change a Little
- Humans are humans, people will still want to lease office space
- There is value in the learning that takes place in overhearing the conversations in the office.
- Not every company will have a remote working policy. This will help them to scale easier as needed. More hoteling desks will be created. Fewer employees will have a permanent desk.
- There is going to be a tremendous backlash of people wanting to be around each other again, however they may not want to give up working from home entirely.
- People are seeing this as the 100 year storm and everything will be back to normal in a year.
- People have not been very productive during the COVID-19 issue for various reasons. Based on that management may be hesitant to roll out WFH.
- In a completely remote culture more ideas will be lost entirely or never be seeded.
- More remote workers may deemphasize company cultures.
Coworking
Coworking will continue to specialize. Rather than just for being around people so you don’t have to work alone or the stage the company is in, they will specialize into the type of business and industry. People want to be around like minded people. People want specialization and be around people that specialize in what they do.
How Will COVID-19 Impact Office Space Rentals and Usage?
There are a lot of opinions about how people will use office space post COVID-19. At the end of the day this is uncharted territory for us all. Nobody really knows how companies will use office space after all of this dies down, however they are entitled to their own opinions. Below are some guesses to ponder as we work through this. As you can see more people think office space usage will decrease as a result of COVID-19
Office Space Usage Decrease
- Office space won’t be used as much
- Companies will use less space and will encourage more remote working.
- Office space will be used more for only holding meetings and having a home base to meet up.
- Even before COVID-19 plenty of successful companies of all sizes were fully remote.
- Technology will change to make us feel more in the presence of others when working remotely.
- The COVID-19 quarantine has forced businesses to work remotely thus giving them the opportunity to realize that there is no reason for employees to drive to the office everyday or hop on a plan for every little meeting. Also they realize it’s possible to train people remotely then having to have them fly out to the company head quarters.
- Companies who once told employees it wasn’t possible to accommodate work from home will lose every disability accommodate battle going forward. With COVID forcing WFH everyone will see that it is possible.
- Some Fortune 500 companies are already talking about not going back to the office for the unforeseen future.
- Business will lease smaller office space square footage for the extroverts that want to socialize more. Introverts will still be allowed to WFH.
- In person meetings will decrease and more focus on only having meetings when absolutely necessary.
- In person meetings will be reserved for team building, fixing problems, and having fun.
- When a company grows to more than 5 people the norm will be 80% work from home or from their preferred coworking facility, and the remaining work from the office. Then meet periodically for live peer to peer experiences 5-10 days per month for 5 hours each time.
- Decision makers will realize how little office space they truly need. The number of remote workers will increase.
- If COVID-19 hasn’t taught us that needing an office is completely unnecessary then we aren’t learning the right lessons.
- So much time will be saved in not having to find a phone booth for private calls or being late for a meeting because the conference room was used by a group that did not reserve it.
- Some people predict companies will realize they don’t need as many employees than they have. More downsizing will occur more than working from home.
- Remote working will increase however many employees will struggle with it. How people adapt to this will determine their success.
- This is going to be a seismic rift that will take years to get back to normal.
- More remote working means companies have a larger talent pool to choose from.
- This will be the ultimate experiment and the anti-open office space trend.
- Lot’s of companies will realize how much money they are wasting on office space and how much time their employees wast driving to and from the office. If companies can learn how to manage at home workers they will see a huge boost in productivity.
- Cubicle farm will be the thing of the past.
- Major companies are telling their employees that they probably won’t have everyone work in the office after COVID-19.
Office Space Usage Will Change a Little
- Humans are humans, people will still want to lease office space
- There is value in the learning that takes place in overhearing the conversations in the office.
- Not every company will have a remote working policy. This will help them to scale easier as needed. More hoteling desks will be created. Fewer employees will have a permanent desk.
- There is going to be a tremendous backlash of people wanting to be around each other again, however they may not want to give up working from home entirely.
- People are seeing this as the 100 year storm and everything will be back to normal in a year.
- People have not been very productive during the COVID-19 issue for various reasons. Based on that management may be hesitant to roll out WFH.
- In a completely remote culture more ideas will be lost entirely or never be seeded.
- More remote workers may deemphasize company cultures.
Coworking
Coworking will continue to specialize. Rather than just for being around people so you don’t have to work alone or the stage the company is in, they will specialize into the type of business and industry. People want to be around like minded people. People want specialization and be around people that specialize in what they do.
Wednesday, March 25, 2020
Force Majeure In Commercial Leases https://t.co/KjUYPPq9ua
Force Majeure In Commercial Leases https://t.co/KjUYPPq9ua
— Nathan K Smith (@AustinTenantAdv) March 25, 2020
from Twitter https://twitter.com/AustinTenantAdv
Force Majeure In Commercial Leases
Commercial lease contracts have a ton of clauses that can be confusing for tenants. You can’t negotiate every contract the same way because tenants have different needs and negotiating leverage maybe stronger or weaker depending on the size and financial strength of the company. In most cases many of the lease clauses will never have a negative affect on a tenant, however it’s important that they understand them. Some clauses will never come into play unless an extraordinary event occurs such as a Force Majeure.
What Does the Force Majeure Clause Mean?
Force Majeure is a clause that can be added to a contract that can free the parties involved from an obligation or extend the time they have to perform an obligation when an extraordinary event beyond their control (eg. earthquake, flood, etc) prevents one or both parties from fulfilling their contractual obligations.
Force Majeure in Commercial Lease Contracts
Most commercial lease contracts include some sort of force majeure clause between the landlord and tenant. Each must fulfill their obligations of the lease contract however their performance maybe excused or their time to perform may be extended in certain situations beyond their control. For example:
- The tenants ability to pay rent
- Landlords ability to deliver the space, provide services, etc.
Some examples of situations that a party might need more time or be excused are strikes, riots, acts of God, shortages of labor or materials, war, terrorist acts or activities, governmental laws, regulations, or restrictions, or any other causes of any kind whatsoever which are beyond the control of such party.
Some force majeure clauses may include pandemic, epidemic, disease, or similar terms, however if yours does not contain those it still may be triggered. For example if the government prohibits a tenant from occupying its space.
Is the Force Majeure Clause Negotiable?
Like everything in commercial lease contracts force majeure is a negotiable item. It’s one of those things that you never think about negotiating until something like a coronavirus pandemic occurs.
Keep in mind Commercial lease force majeures don’t always unbind both the landlord and tenant from lease obligations. If you are a tenant you must negotiate to have that included.
Can a Tenant Get Free Rent?
In most cases tenants are still on the hook to pay the landlords the monthly rent. Landlord attorneys do a great job of including language that excludes tenants from being able to use force majeure as a reason to not pay rent. Landlords might extend the time for a tenant to pay rent however more than likely tenants won’t be excused.
Examples of force majeures in commercial leases
Below are some real examples force majeure clauses found in a few commercial leases
Office Lease Force Majeures
#1 In the event that Landlord shall be delayed in the performance of any obligation hereunder as a result of strikes, lockouts, shortages of labor, fuel or materials, acts of God, legal or governmental requirements, fire or other casualty, or any other cause beyond the control of Landlord (collectively, “Force Majeure”), then the performance of such obligation shall be excused for the period of such delay, and the period for the performance of such obligation shall be extended by the number of days equivalent to the number of days of such delay. Landlord shall in no event be required to settle or compromise any strike, lockout or other labor disputes, the resolution thereof being within the sole discretion of Landlord.
#2 Other than for Tenant’s obligations under this Lease that can be performed by the payment of money (e.g., payment of Rent and maintenance of insurance), whenever a period of time is herein prescribed for action to be taken by either party hereto, such party shall not be liable or responsible for, and there shall be excluded from the computation of any such period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, war, terrorist acts or activities, governmental laws, regulations, or restrictions, or any other causes of any kind whatsoever which are beyond the control of such party.
Warehouse Lease Force Majeures
For purposes of this Lease, the term “Unavoidable Delay” shall mean any delays due to strikes, lockouts, civil commotion, warlike operations, invasion, rebellion, hostilities, military or usurped power, sabotage, government regulations or controls, governmental actions, regulations, or legal requirements, including, without limitation, requirements of the City of San Antonio, Bexar County, San Antonio Water System (SAWS), Texas Commission on Environmental Quality (TCEQ), or Texas Department of Transportation (TxDOT); the discovery of any caves, sinkholes, endangered species or other environmental conditions subject to regulation by TCEQ, U.S. Fish & Wildlife Agency, or other applicable governmental agencies, inability to obtain any material, utility, or service because of governmental restrictions, hurricanes, floods, or other natural disasters, acts of God, weather delays, including, but not limited to, significant rainfall, freezing weather, or the effects of significant weather (i.e., muddy conditions that prohibit access to the worksite), or any other cause beyond the direct control of the party delayed (not including the insolvency or financial condition of that party or the increased cost of obtaining labor and materials). Notwithstanding anything in this Lease to the contrary, if Landlord or Tenant shall be delayed in the performance of any act required under this Lease by reason (other than the payment of Rent or any other monetary obligations) of any Unavoidable Delay, then performance of the act shall be excused for the period of the delay and the period for the performance of the act shall be extended for a reasonable period, in no event to exceed a period equivalent to the period of the delay.
Here are some other resources to check out regarding Force Majeure and the Coronavirus impact from MR LLP and BakerDonelson.
This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.
Force Majeure In Commercial Leases
Commercial lease contracts have a ton of clauses that can be confusing for tenants. You can’t negotiate every contract the same way because tenants have different needs and negotiating leverage maybe stronger or weaker depending on the size and financial strength of the company. In most cases many of the lease clauses will never have a negative affect on a tenant, however it’s important that they understand them. Some clauses will never come into play unless an extraordinary event occurs such as a Force Majeure.
What Does the Force Majeure Clause Mean?
Force Majeure is a clause that can be added to a contract that can free the parties involved from an obligation or extend the time they have to perform an obligation when an extraordinary event beyond their control (eg. earthquake, flood, etc) prevents one or both parties from fulfilling their contractual obligations.
Force Majeure in Commercial Lease Contracts
Most commercial lease contracts include some sort of force majeure clause between the landlord and tenant. Each must fulfill their obligations of the lease contract however their performance maybe excused or their time to perform may be extended in certain situations beyond their control. For example:
- The tenants ability to pay rent
- Landlords ability to deliver the space, provide services, etc.
Some examples of situations that a party might need more time or be excused are strikes, riots, acts of God, shortages of labor or materials, war, terrorist acts or activities, governmental laws, regulations, or restrictions, or any other causes of any kind whatsoever which are beyond the control of such party.
Some force majeure clauses may include pandemic, epidemic, disease, or similar terms, however if yours does not contain those it still may be triggered. For example if the government prohibits a tenant from occupying its space.
Is the Force Majeure Clause Negotiable?
Like everything in commercial lease contracts force majeure is a negotiable item. It’s one of those things that you never think about negotiating until something like a coronavirus pandemic occurs.
Keep in mind Commercial lease force majeures don’t always unbind both the landlord and tenant from lease obligations. If you are a tenant you must negotiate to have that included.
Can a Tenant Get Free Rent?
In most cases tenants are still on the hook to pay the landlords the monthly rent. Landlord attorneys do a great job of including language that excludes tenants from being able to use force majeure as a reason to not pay rent. Landlords might extend the time for a tenant to pay rent however more than likely tenants won’t be excused.
Examples of force majeures in commercial leases
Below are some real examples force majeure clauses found in a few commercial leases
Office Lease Force Majeures
#1 In the event that Landlord shall be delayed in the performance of any obligation hereunder as a result of strikes, lockouts, shortages of labor, fuel or materials, acts of God, legal or governmental requirements, fire or other casualty, or any other cause beyond the control of Landlord (collectively, “Force Majeure”), then the performance of such obligation shall be excused for the period of such delay, and the period for the performance of such obligation shall be extended by the number of days equivalent to the number of days of such delay. Landlord shall in no event be required to settle or compromise any strike, lockout or other labor disputes, the resolution thereof being within the sole discretion of Landlord.
#2 Other than for Tenant’s obligations under this Lease that can be performed by the payment of money (e.g., payment of Rent and maintenance of insurance), whenever a period of time is herein prescribed for action to be taken by either party hereto, such party shall not be liable or responsible for, and there shall be excluded from the computation of any such period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, war, terrorist acts or activities, governmental laws, regulations, or restrictions, or any other causes of any kind whatsoever which are beyond the control of such party.
Warehouse Lease Force Majeures
For purposes of this Lease, the term “Unavoidable Delay” shall mean any delays due to strikes, lockouts, civil commotion, warlike operations, invasion, rebellion, hostilities, military or usurped power, sabotage, government regulations or controls, governmental actions, regulations, or legal requirements, including, without limitation, requirements of the City of San Antonio, Bexar County, San Antonio Water System (SAWS), Texas Commission on Environmental Quality (TCEQ), or Texas Department of Transportation (TxDOT); the discovery of any caves, sinkholes, endangered species or other environmental conditions subject to regulation by TCEQ, U.S. Fish & Wildlife Agency, or other applicable governmental agencies, inability to obtain any material, utility, or service because of governmental restrictions, hurricanes, floods, or other natural disasters, acts of God, weather delays, including, but not limited to, significant rainfall, freezing weather, or the effects of significant weather (i.e., muddy conditions that prohibit access to the worksite), or any other cause beyond the direct control of the party delayed (not including the insolvency or financial condition of that party or the increased cost of obtaining labor and materials). Notwithstanding anything in this Lease to the contrary, if Landlord or Tenant shall be delayed in the performance of any act required under this Lease by reason (other than the payment of Rent or any other monetary obligations) of any Unavoidable Delay, then performance of the act shall be excused for the period of the delay and the period for the performance of the act shall be extended for a reasonable period, in no event to exceed a period equivalent to the period of the delay.
Here are some other resources to check out regarding Force Majeure and the Coronavirus impact from MR LLP and BakerDonelson.
This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.
Force Majeure In Commercial Leases https://t.co/cIPb8NrQCC https://t.co/iAsmip2Oe1
Force Majeure In Commercial Leases https://t.co/cIPb8NrQCC pic.twitter.com/iAsmip2Oe1
— Nathan K Smith (@AustinTenantAdv) March 25, 2020
from Twitter https://twitter.com/AustinTenantAdv
Tuesday, March 24, 2020
Christopher Pawelski thanks for following me on Twitter! https://t.co/Kgzb5nCzoH
Christopher Pawelski thanks for following me on Twitter! https://t.co/Kgzb5nCzoH
— Nathan K Smith (@AustinTenantAdv) March 24, 2020
from Twitter https://twitter.com/AustinTenantAdv
Monday, March 23, 2020
Alliance Virtual thanks for following me on Twitter! https://t.co/piPMoW8WLQ
Alliance Virtual thanks for following me on Twitter! https://t.co/piPMoW8WLQ
— Nathan K Smith (@AustinTenantAdv) March 23, 2020
from Twitter https://twitter.com/AustinTenantAdv
Saturday, March 21, 2020
Lou Beaird thanks for following me on Twitter! https://t.co/eungx3CtBi
Lou Beaird thanks for following me on Twitter! https://t.co/eungx3CtBi
— Nathan K Smith (@AustinTenantAdv) March 21, 2020
from Twitter https://twitter.com/AustinTenantAdv
Friday, March 20, 2020
XSPACE thanks for following me on Twitter! https://t.co/faz2IIRmYY
XSPACE thanks for following me on Twitter! https://t.co/faz2IIRmYY
— Nathan K Smith (@AustinTenantAdv) March 20, 2020
from Twitter https://twitter.com/AustinTenantAdv
Thursday, March 19, 2020
Reader Favorites thanks for following me on Twitter! https://t.co/6rovKoSJOo
Reader Favorites thanks for following me on Twitter! https://t.co/6rovKoSJOo
— Nathan K Smith (@AustinTenantAdv) March 19, 2020
from Twitter https://twitter.com/AustinTenantAdv
Orrin I. Goodwin thanks for following me on Twitter! https://t.co/egKveZt0FI
Orrin I. Goodwin thanks for following me on Twitter! https://t.co/egKveZt0FI
— Nathan K Smith (@AustinTenantAdv) March 19, 2020
from Twitter https://twitter.com/AustinTenantAdv
Lois K. Gibson thanks for following me on Twitter! https://t.co/5VjV3702Xk
Lois K. Gibson thanks for following me on Twitter! https://t.co/5VjV3702Xk
— Nathan K Smith (@AustinTenantAdv) March 19, 2020
from Twitter https://twitter.com/AustinTenantAdv
Wednesday, March 18, 2020
Gloria Santos thanks for following me on Twitter! https://t.co/QMcSlor690
Gloria Santos thanks for following me on Twitter! https://t.co/QMcSlor690
— Nathan K Smith (@AustinTenantAdv) March 18, 2020
from Twitter https://twitter.com/AustinTenantAdv
Climate Change Institute Research thanks for following me on Twitter! https://t.co/xoEmtIF1FO
Climate Change Institute Research thanks for following me on Twitter! https://t.co/xoEmtIF1FO
— Nathan K Smith (@AustinTenantAdv) March 18, 2020
from Twitter https://twitter.com/AustinTenantAdv
Friday, March 13, 2020
Frank Cottle thanks for following me on Twitter! https://t.co/lv6NKSPv38
Frank Cottle thanks for following me on Twitter! https://t.co/lv6NKSPv38
— Nathan K Smith (@AustinTenantAdv) March 13, 2020
from Twitter https://twitter.com/AustinTenantAdv
Thursday, March 12, 2020
Digsy thanks for following me on Twitter! https://t.co/xhhvEAhgAj
Digsy thanks for following me on Twitter! https://t.co/xhhvEAhgAj
— Nathan K Smith (@AustinTenantAdv) March 12, 2020
from Twitter https://twitter.com/AustinTenantAdv
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