US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

Empty Office Buildings Provide Challenges & Opportunities

One interesting change caused by the COVID-19 pandemic has been how quickly many American businesses and employees have adapted to working from home. While analysts on this site have frequently documented how this has affected residential building construction, the COVID-19 pandemic has also affected the commercial sector. However, there the effects have been less positive.

A recent article highlights one potential downside to working from home: much of the commercial building space devoted to offices and corporate suites now lies empty, with far fewer – if any – staff in them. While the silence may be a boon to the productivity of the workers that remain, its effect on commercial construction is far murkier. As firms occupy less office space and continue to commit to remote work, a new question arises: what will be done with all these vacant offices?

Some answers include:

  • Other tenants will be able to fill these spaces, providing them with more space for operations – especially if landlords offer generous rent reductions to keep businesses in these spaces.
  • Conversion into apartments and condominiums – many US cities have shortages of affordable housing, and these buildings can be made into residences for (in some cases) hundreds of tenants.
  • Other types of businesses will move into these buildings, especially as cities look for ways to fill buildings with commercial tenants to boost tax coffers and employment. Communities can convert office buildings into pop-up kitchens, artists’ galleries and studios, community health clinics, even such recreational facilities as gyms and rock-climbing venues.

As cities and landlords look for ways to keep people in these buildings and maintain revenue flows, construction firms will be able to benefit even as they face the prospect of erecting far fewer new commercial structures going forward. Commercial contractors that can offer the following services will be able to withstand the new few year better than others:

  • Interior construction and renovation – installing drywall and wall panels, painting, installing touchless lighting technologies and occupancy sensors, and rewiring
  • Plumbing – buildings converted into apartments will need many more bathrooms; even in those buildings that remain commercial structures, more plumbing fixtures (including touchless types) and fittings will be installed to promote social distancing.
  • Insulation installation and energy efficiency – many building owners will take advantage of this work to improve a building’s environmental efficiency, such as by adding insulation or installing ENERGY STAR HVAC systems.
  • Flooring installation – flooring is often replaced in old buildings to create a new appearance. Some companies will add hard surface flooring to improve indoor air quality, while others will use durable yet replaceable carpet tile to impart a more residential look.
  • Indoor air quality – specialists have been recommending improved ventilation systems with more frequent fresh air exchanges and the use of HEPA filtration to limit the potential of the spread of COVID-19 or other airborne illnesses.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Construction and Building Products. Freedonia also offers an expanding catalog of COVID-19 Economic Impact reports, which highlight how various industries are responding to the current crisis with a comparison to recent recessions. Freedonia Custom Research is also available for questions requiring tailored market intelligence