NEW YORK (Reuters) - The coronavirus pandemic will not be the end of office buildings, Brookfield Asset Management Chief Executive Bruce Flatt said on Wednesday in an interview with Reuters Breakingviews.
Office workers globally have shifted to working from home during the pandemic, with Gallup reporting that 62% of employed Americans in April had worked from home during the crisis, double the number in March.
While this trend has raised questions about the future of office space, Flatt said he believes that company culture and productivity are dependent on sharing a common space and “it is ludicrous to think that companies will not return to offices. Anyone who says they’re not going to be in offices is naive about how company culture is built.”
Toronto-based Brookfield manages over $515 billion in assets and is the parent company of Brookfield Property Partners, a real estate company that holds one of the largest commercial portfolios in the world. Commercial real estate has been hit hard by the pandemic, as retailers and restaurants have missed payments or shuttered entirely. Brookfield Property’s share price has fallen 33.8% in the year to date.
But social distancing practices may ultimately be a boon for office building owners like Brookfield as companies seek to space out employees more. “We’ve had more tenants ask us for more space since this occurred than for less,” he said, “to accommodate more distancing.”
The pandemic, Flatt said, is likely to put an end to so-called hot desking - the use of desks as needed, or in rotation. Short-term office leases, the model used by We Company in its WeWork spaces, are also likely to take a hit.
“To the extent that there are environments where everything was going to change to short-term space, that’s not going to happen.”
Breakingviews, which hosted the event on Wednesday, is the commentary division of Reuters News.
Reporting by Kate Duguid; Editing by Bernadette Baum and Steve Orlofsky