Page 30 - RENJ Sept.21

28 SEPTEMBER 2021
ROUNDTABLE
AMID CONTINUED UNCERTAINTY IN THE MARKET, HOW SHOULD OFFICE LANDLORDS AND TENANTS APPROACH LEASE RENEWALS IN 2022?
CAROLINA GUTIERREZ
MANAGER, LEASING
AND MARKETING
ALFRED SANZARI ENTERPRISES (HACKENSACK)
Unfortunately, the challenging business environment that emerged during the earliest phases of the COVID-19 pandemic continues to linger as we
begin to look
toward the new
year. However,
those early days
taught office
landlords the
importance
of close
collaboration and flexibility, key factors in helping tenants navigate those significant challenges.
Whereas some landlords might have previously viewed lease renewals as just another business negotiation, lease renewals have now evolved to become collaborative discussions with tenants. Looking to 2022, landlords have an opportunity to work in tandem with tenants as they seek to understand the future of work and how it will impact their workplaces and workforce. Through a continued focus on two-way communication, landlords can ensure that tenants’ spaces are flexible enough to align with their current and evolving long-term space needs while also reiterating a continued commitment to tenant health and safety amidst the ongoing COVID-19 pandemic.
ADAM ALTMAN
MANAGING MEMBER THE KABR GROUP (RIDGEFIELD PARK)
The office market is highly inconsistent right now. There are some markets that seem to be doing well and other markets that are facing significant headwinds. New York
City towers have remained lightly occupied. These buildings have continued as performing assets since they often contain long-term leases
— with reliable tenants. Rents and therefore mortgages continue to get paid but lenders and borrowers are anxious. To be clear, if the public mindset does not shift from social avoidance to social participation in the next 12 to 24 months, there will
be increased reason for concern for the New York City office market.
In the Northeast, suburban markets anchored by health, life sciences and technology are seeing extensions, renewals and growth. Landlords
and tenants need to assess and
take stock of the dynamics in their specific submarket to best prepare
a go-forward leasing strategy. The momentum around work from home is real and normative practices will continue to be established. The likely outcome will be one of flexibility around when an employee is present in the office. Therefore, offices
and office buildings will remain
an important component of the modern day work dynamic. This is underscored by the announcement of leading tech and health care companies expanding their presence and investment in office. Companies that pride themselves on having a corporate DNA of mentoring and
an iterative process will require a level of in-person collaboration for employees who seek to become thought leaders.
JULIE KRONFELD
VICE PRESIDENT
NAI MERTZ (MOUNT LAUREL)
As we look forward to 2022, the new Delta variant is playing a prominent role in office renewal decisions. Earlier this summer, many companies
were focused on implementing plans to bring employees
back to the office after the Labor Day holiday. Now, with the Delta
variant in play and nearly every county in New Jersey being labeled ‘high risk’ for contracting the virus, companies are re-evaluating their return-to-work policies, and this continues to shape office market leasing trends. We see tenants taking the same amount of space with reconfigured space plans to afford more room between workstations and touch down stations for those sharing time in office and home office as an evolved model that is keeping the amount of space leased trending on par with historical numbers, suggesting renewals should flow in line with prior years. We
also see tenants requesting short- term renewals while they assess whether employees will continue
a work-from-home status. Tenants should make informed decisions
LESLIE FLORIO
VICE PRESIDENT OF ACQUISITIONS AND LEASING
CHA PARTNERS (BLOOMFIELD)
As landlords are negotiating lease renewals, flexibility and creativity are playing
large roles in
the outcomes. Amongst smaller companies, we’re still
seeing shorter-
term deals,
whereas some
larger companies are maximizing on opportunities and locking in longer-term leases, many with built- in incentives. Overall, New Jersey
is seizing the opportunity to attract companies from New York City that are relocating and/or exploring hub- and-spoke models. In these cases,
companies are setting up satellite offices within New Jersey’s transit- oriented markets, opening them
up to a wider pool of talent and customers who have migrated out of densely populated regions during the pandemic.
We are also seeing a new mindset emerge whereby landlords are thinking differently about space utilization. At some of our properties, we’re considering including smaller private office spaces that are large enough to allow for social distancing and provide a great alternate workplace for tenants. Employees growing tired of working from
home, or that may be struggling with distractions at home, are seeking new options that allow them to remain productive closer to home, and these smaller space configurations can help them meet that need.