At the beginning of 2020, I predicted there would be a paradigm shift of people working from home permanently and that commercial leasing would be affected by this shift. Companies started to look at reducing their corporate footprint in commercial leasing.

“Commercial real estate companies may also feel a residual effect from COVID-19. As more people telecommute for work, the need for as much office space drops in many metropolitan areas. Connections become more important in multi-tenant residential buildings where more of the tenants may need high-speed broadband connectivity to connect into their companies’ computer systems.”

As discussed in several articles throughout 2020, critical shifts were pointed out, but few were paying attention. The “reverse of musical chairs” started to seep into the commercial leasing market and more space became available in downtown and suburban office park buildings as more companies began reducing their commercial leasing demands. The tsunami was coming.

From 2020 to the beginning of 2022. some companies had reduced their space requirements by 50%. The overall impact of the tsunami was clearly pointed out, not only for commercial leasing but for all the surrounding businesses in a downtown area.

“Multiply that decision by 100-120 companies in a downtown area and you can see where revenues would plummet significantly for the property owners as well as a variety of lost tax revenues for the municipality and traffic to various surrounding businesses like restaurants and retail stores.”

Meta (the parent company of Facebook, Instagram, and WhatsApp) just announced cutbacks in leasing office space across their total enterprise to the tune of several billion dollars. This has come as a shock to many, but if they had read previous articles here, they would have anticipated this tsunami a couple of years ago coming into many, if not all, major commercial markets due to the paradigm shift in the way companies were operating during the pandemic.

Many companies, ranging from Amazon and other high-tech companies to banks and smaller firms, have taken a second look at their growth and building development plans because things have changed in the workplace.

Cities like Chicago, New York, Boston, and others are being challenged by the unanticipated revenue shortfalls that they did not plan for. They all figured to rely on federal COVID relief money carrying them through 2022 and by 2023, things would “get back to normal.”

Elected officials also felt cities would get back to “business-as-usual.” Well, they haven’t, and they never will go back to pre-pandemic levels of commuters and traffic in the cities.

People have decided to stay at home and work from there. The option of coming back to work does not excite anyone and the resistance to commuting is real. Companies that rushed to adjust to a new working environment must realize that because it took so long to get through COVID, many people have changed their work habits permanently.

As for cities and their leadership managing through this tsunami? Any fool can handle the helm in calm seas. Weathering the storm and setting a new direction takes real skills. Now, real leadership and real solutions to budget shortfalls are needed. Some just don’t have the skills. Don’t reward incompetence by re-electing it.

After they hit, all tsunamis leave the landscape very differently than what was originally in place. This tsunami will not be any different.