NewHavenBIZ

n e w h a v e n b i z . c o m | J u n e 2 0 2 1 | n e w h a v e n B I Z 17 "If you have a seasoned group of employees and know they're capable of doing their job, then working from home [may work]." Ostop said. "But if you have a number of [younger and new employees] in need of onboarding that can be super hard to do remotely." Workplace flexibility e return to work picture — both in New Haven and nationally — is starting to come more into focus as companies begin to announce transition plans, according to new survey research from the Society of Human Resource Management (SHRM), a national HR membership association. Nearly four in 10 companies will imple- ment a phased return strategy, with critical teams first, and 19 percent will employ an alternating strategy. But the longer-term plans reflect a grow- ing openness to work-from-home flexibility. Sixty-eight percent of all organizations and 73 percent of large companies (with 500-plus employees) will likely or definitely adopt more remote work opportunities, according to SHRM data. Additionally, more than a quarter of organizations (26 percent) that did not previously offer remote work will probably or definitely allow workers to do so perma- nently. at's likely to increase pressure on property owners and developers to upgrade amenities, says Will Lorenz, the director of leasing for FUSCO Management LLC, a New Haven-based property management and development firm. Lorenz says Class A properties — the top-tier category of commercial real estate with the highest per-square-footage price tag — oen feature perks like on-site park- ing, cafes, gyms and daycare centers. He anticipates some property owners may offer new upgrades that will play well to safe- ty-conscious tenants and employees. "I think we'll see higher quality air filters [in buildings] just to make everyone feel [safer]," he said. Cost concerns As the demand for investment in upgraded ventilation and touchless amenities emerge, it's creating a financial challenge for property owners and managers, says JLL's Ostop, because they are confronting stagnant lease rates and short-term shrinking demand — both revenue concerns — while seeing the costs of adding perks and doing business increasing. Ostop says the cost of commercial lease rates in Connecticut and New Haven have been largely stagnant for more than two decades. "In New York, rents can go from $40 to $80 to $120 in 24 months," Ostop said. "We don't have that level of volatility." In 2020, for instance, average office space in New Haven ranged from $18.29 per square foot for Class C buildings to $33.43 for Class A, ac- cording to MarketEdge, a market research group that tracks New Haven property rates. Ostop says that while he understands the trends toward more biotech space, he notes that existing New Haven property owners may find challenges in financing the con- version of existing space to serve biotech demand. at's because many of the biotech firms seeking lab and office space are early-stage companies with less available funding for the higher lease rates property owners would have to charge to renovate space New Haven 1Q office market snapshot Type of Total Direct Sublease Total Vacancy Previous Net Avg. asking space inventory availability availability availability rate vacancy rate absorbtion YTD rent (per sq ft.) n CENTRAL BUSINESS DISTRICT Class A 1,815,265 146,332 44,144 190,476 10.5% 8.7% -32,000 $25 Class B 1,224,081 102,098 0 102,098 8.3% 6.3% -24,778 $19.50 Total 3,039,346 248,430 44,144 292,574 9.6% 7.8% -56,778 Type of Total Direct Sublease Total Vacancy Previous Net space inventory availability availability availability rate vacancy rate absorbtion YTD Class A 687,052 326,812 22,379 349,191 50.8% 50.6% -1,294 Class B 1,977,710 417,385 9,943 427,328 21.6% 19.5% -55,664 Total 2,664,762 744,197 32,322 776,519 29.1% 27.7% -56,958 n NON-CENTRAL BUSINESS DISTRICT Source: Colliers and secure bank loans. "Where are those landlords going to get the money to build out lab space that might cost three or four times the cost of traditional office space?" Ostop asked. Garrett Sheehan, the president and CEO of the Greater New Haven Chamber of Commerce, understands the concern, but is bullish on both the city's biotech future and the resilience of its office space. He points to the lease deal that life sciences company Arvinas recently signed to take 160,000 square feet at 101 College Street starting in 2024. Yale also announced it will occupy an additional 125,000 square feet in the building, which will include co- working space for life science startups run by Cambridge-based BioLabs. He also sees signs of life in the city as restaurants, retailers and offices reopen and see more activity. Sheehan knows challenges remain but he's bullish about the future. n Garrett Sheehan PRESENTED BY: MEDIA PARTNERS: EVENT PARTNERS: • Middlesex Chamber of Commerce • Waterbury Chamber of Commerce • Chamber of Commerce Northwest Connecticut, Inc. • Greater New Haven Chamber of Commerce • CBIA • MetroHartford Alliance • CTSHRM A TRANSPORTATION WEBINAR SERIES: SESSION TWO THE IMPACT OF COVID-19 ON CURRENT WORKPLACE TRENDS AND COMMUTING On May 18th CTrides presented the second webinar in a series that is exploring transportation topics that affect Connecticut's businesses and residents. This webinar explored COVID-19's impact on "return to work" expectations, the evolving nature of commuting, and strategies for how organizations can move forward in this uncertain time. THANK YOU TO SPEAKERS, ATTENDEES AND SPONSORS! CATCH THE RECORDING OF THE WEBINAR, AVAILABLE AT WWW.HARTFORDBUSINESS.COM/CTINMOTIONSESSION2

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