CHALLENGING, BUT A 'LUCKIER PLACE'.

Commercial real estate is in the midst of major flux because of changing working and consuming habits. For this Business North Carolina round table at the Greensboro Chamber of Commerce, six commercial real estate pros gathered to discuss how the changes are affecting North Carolina. Major challenges are evident, particularly in office real estate, but the group agrees that North Carolina is well-positioned because of population growth and a positive economic and political climate.

Photography by Bryan Regan

PANELISTS

Andy Andrews chairman and CEO, Dominion Realty Partners

Greg Hatem founder and managing partner, Empire Properties

Kimberly Kendall, SIOR, CCIM senior director, Colliers International

Steve Malloy owner and commercial broker, Adcock Real Estate Services

Evan Stone vice president, industrial business development, The Carroll Companies

Mike Thornton partner and commercial real estate attorney, Smith Anderson law Firm

Adcock Real Estate Services, Dominion Realty Partners and Smith Anderson law firm sponsored the discussion. It was moderated by David Mildenberg, editor of Business North Carolina. It was edited for brevity and clarity.

WHAT'S GOING ON WITH OFFICE SPACE IN THE RALEIGH AND CHARLOTTE MARKETS?

KENDALL: It's a big question mark, for a lot of different companies. They're trying to figure out this whole outlook in the future, and nobody knows what it's going to look like. Hybrid work is here to stay for a while. For certain sectors of business, it's seamless to work from home. So call centers, those types of uses, they have completely gone remote. I don't think they're coming back, because they haven't found a decline in productivity.

I think with other types of tech firms, and even law offices, they're back in the office every single day. A report recently said that for the first time since the pandemic happened, we are at 50% occupancy across the country. That's a good sign, especially since you're never at 100%. Before COVID, it was typically around 75% to 80%, at any given time.

I would also share that for the first time, there have been five consecutive quarters of declining productivity. That's the first time that's happened since post World War II. Companies are realizing: "We thought we were productive, but it's starting to go downhill." Employees are starting to watch more Netflix instead of working or they're doing laundry or walking their goldendoodle.

It's still an employee-based world, and the employees want to work from home. In Charlotte, when you drive in on Tuesday, Wednesday or Thursday, it's locked down traffic. Everyone, of course, picks to have Monday and Friday off. It's going to flip, though. It's going to go back to an employer-dictated environment. Then the employees will either have to find a new job, or go back five days a week if their companies are dictating they go back.

HATEM: We had a lot of unrest in 2020. People have found a way not to come to work. I don't know how they do that. But I guess it's a nice gig. So we're trying to recruit people back into downtown. We're jumping back in and learning how to do all those things we did at the beginning to revitalize downtown again today.

In many ways, I'm not as excited about 50% occupancy, but you're the optimist at the table, Kim. A 50% number popped up in a report on cell phone usage. In Raleigh, we're at about 50% of what we were pre-pandemic. Some cities like Salt Lake City are at 70% to 80%. We're at about 52%. We know there are fewer folks in our downtown, because everybody has a cellphone and they're just tracking less usage. So that's a little concerning.

As for employees choosing...