Are Offices Going Too Far With Covid-Led Makeovers?

As non-essential construction has started again in New York, some design and construction firms are creating new ways to design and build space.

Office design is ripe for new ideas. While some firms are taking a “wait-and-see” approach to renovating space, others are reimaging what workspace will look like in the future. “The health concerns coming out of the pandemic will shape design and construction moving forward,” according to Avison Young’s New York City Third Quarter Design & Construction report.

For existing office space, the changes have been minimal outside of touchless fixtures and hand-sanitizer stations. “Companies are often not willing to invest the capital because we may return to traditional practices sometime next year,” according to Avison Young. “However, these short-term measures have not reassured much of the workforce to return to [the] office, as many businesses are still permitting full or part-time work from home options through at least the end of the year.”

In the future, companies will need to balance employee safety with collaboration and productivity, Avison Young says. Companies may choose to keep some parts of popular open-office layouts with hybrid designs that remain open for proper air circulation but are divided to prevent the spread of germs across long distances. These compromises could include larger privacy panels, fixed open wall systems and breakout rooms with opposite-facing work surfaces.

Going Too Far? 

But there is concern in some quarters that proposed changes to office design in the wake of the pandemic could go too far. Earlier this year, Dr. Aaron Bernstein, USGBC board chair and also the co-director of Harvard’s Center for Climate, Health and the Global Environment (Harvard C-CHANGE), told GlobeSt he was concerned the design community might overreact to the pandemic. “There are a lot of things that people are saying about current design thoughts, including about the open office, and whether urbanization and public transportation are good ideas,” he said. 

While Bernstein says these questions are coming from reasonable places, he cautions that people should not automatically discard these formerly popular design features because of the coronavirus.

For her part, Rachel Gutter, president of the International WELL Building Institute, is concerned that some of the temporary changes that are being proposed, such as people being stationed six feet apart in offices, could become permanent once there is a vaccine for the novel virus.

“I think that the ramifications of us going six feet apart and one-tenth of occupancy at offices have hugely negative implications for things like climate change, resourcing for organizations and urban density,” Gutter says. “I’m not ready to say that those are good solutions, nor am I ready to say that they are even hopeful solutions.”

Ventas Buys Life Science Portfolio in San Francisco for $1B

The Ventas Life Science and Healthcare Real Estate Fund has acquired a trophy life science portfolio in the South San Francisco life science cluster for $1 billion. The seller is Bain Capital Real Estate.

Ventas is the sponsor and general partner of the fund, which is a perpetual life vehicle focused on investments in core and core plus life science, medical office and senior housing real estate in North America.

The purchase price for the portfolio represents approximately a 5% capitalization rate on forward cash net operating income. The average escalator for the portfolio exceeds 3%. The seller is an affiliate of the partnership from which Ventas acquired 1030 Massachusetts Ave., in Cambridge, Mass., last year. 

The portfolio, positioned at the entrance to the South San Francisco life science cluster, consists of a campus of three newly developed or renovated buildings totaling nearly 800,000 square feet. It is 96% leased with a weighted average lease term of over six years.

Nearly half of the tenant base consists of public companies averaging over $10 billion in market cap. They are a diverse group of early to-mid stage life science companies.

Bain Capital Real Estate and Phase 3 Real Estate Partners acquired the two office buildings and development site through two transactions in 2015 to create their flagship Genesis location in South San Francisco. The project is one of the submarket’s largest ready-to-occupy, amenity-filled life sciences campus.

“We are pleased to further expand our growing research & innovation footprint into the premier South San Francisco life science cluster with the acquisition of this outstanding lab portfolio,” said Debra A. Cafaro, Ventas Chairman and Chief Executive Officer. “Strong and growing capital flows into the life science sector are accelerating innovation and discovery. These flows support the demand for first class lab space in dynamic markets like South San Francisco.”

Ventas now owns or has an investment in over seven million square feet of research & innovation properties located in the life science clusters of Cambridge, South San Francisco, and on the campuses of over 15 top tier research universities, she added.

The Ventas Life Science and Healthcare Real Estate Fund has raised more than $1 billion of equity and more than doubled its assets under management to $1.8 billion, according to Cafaro.

Online Shopping Leaves Property Managers with Package Onslaught

Of the countless ways COVID-19 has impacted the multifamily industry, one of the most lasting effects may be package volume. As brick-and-mortar stores temporarily closed and consumers became hesitant to venture out, renters increasingly turned to online shopping.

For property managers, the result has been an onslaught of packages being delivered to multifamily communities. Unfortunately for those managers, that trend won’t be slowing anytime soon. And in fact, the data suggests just the opposite.

“COVID-19 may have accelerated online buying behavior, but the shopping habits of residents won’t just regress when virus concerns subside,” said Michael Patton, Fetch founder and CEO. “E-commerce is here to stay and package management is a burden that property managers will be forced to deal with at increasing levels for the foreseeable future.”

Fetch, an off-site package solution for multifamily communities, recently released three-year projections for package volume in the multifamily space. From January 2019 to January 2020, per-unit package volume among multifamily communities served by Fetch increased by only a modest 2%. However, as coronavirus concerns began to emerge in February, package volume spiked to 29% above figures from the previous year.

This was just the beginning. Year-over-year package numbers increased by 39% in March and 48% in April. Even as mandated closures and tay-at-home orders were lifted, package volume continued to skyrocket in May (58%), June (63%), July (37%) and August (41%), increasing from the same month last year.

The average monthly package volume per apartment home for active Fetch users topped 10 packages in May, up from 6.34 the previous year with June (9.72), July (9.53) and August (9.83) averages easily surpassing the holiday season average of 9.05 in December 2019.

“With the package volume apartment communities are currently experiencing, it’s like every day is Cyber Monday,” said Patton. “Multifamily properties need a sustainable solution to their increasing package needs because our projections show that this trend will only continue.”

Fetch projections anticipate that monthly package rates for users will retract slightly to 8.19 packages per apartment home in 2021, before climbing to 9.41 in 2022 and 10.65 packages per month in 2023. Growth rates for e-commerce ballooned to an assumed 18% in 2020 and the growth rate is projected to remain above 13% for the next two years before settling in at 12.9% in 2023.

Fetch, which will deliver approximately 2.7 million packages in 2020, expects to deliver slightly more than 8.7 million packages to multifamily homes by the end of 2021. These growth projections include expected new customers, with that number increasing to more than 36.8 million packages by 2023.

“When examining year-over-year, Fetch saw a 248.4% volume increase. Specifically in 2019, there were 438,637 packages and 2020 to date, that number is 1,091,608,” Patton tells “Please note this also includes new customers. We currently serve 227 properties throughout Texas.”

Fetch closed an $18 million Series B in August. Iron Gate Capital and Pando Ventures led the round and were joined by existing investors Signal Peak Ventures, Silverton Partners, Seamless and Venn Ventures

The firm uses a large network of warehouses and Fetch delivery drivers to serve as the direct-to-door package management solution, entirely removing communities from package management. This allows residents to control delivery service from the comfort of their sofas.

Supply chain demand: Here to stay

COVID-19 and its associated forces, global lockdowns, financial safeguarding and supply chain disruptions, delivered a blow to all industries, including the industrial and logistics real estate sector. But in the second half of 2020, demand for industrial real estate has not only recovered, it has increased.

To understand the new configuration of the market and the unshakable strength that lies ahead, it is important to consider the intricate forces of the supply chain market, the differences between regions and types of real estate, and the new avenues for post-COVID demand, says Zain Jaffer, founder and CEO of Zain Ventures.

All signs point to unwavering demand for distribution spaces, even amid a global recession. CBRE’s midyear review of the global real estate market names three main sources of demand in the logistics industry: e-commerce, safety inventory and improved supply chain strategy.

As the official COVID-19 pivot, e-commerce sales are through the roof across the globe and will likely stay that way. Retailers everywhere are preparing for a greater percentage of goods and services to be found and acquired online. A trend that was already on the rise, CBRE compared e-commerce as a percent of total retail sales in the 10 countries with the highest retail output: the 17% figure from 2019 is projected to increase to 21% by 2021 and a whopping 39% in 2030.

One new entry to the e-commerce economy s the grocery sector. A huge spike in demand is coming from grocers pivoting to sell food and beverages online, fueling the need for new storage strategies. Grocery retailers are preparing for a future in which the supermarket diminishes as a point of interaction, as more consumers acclimate to having groceries delivered. CBRE predicts that medical, data providers and national third-party logistics providers will introduce similar low-risk demand, according to Jaffer.

“Safety inventory is a COVID invention, born from the erratic consumer behavior and the unforgettable inefficiencies in supply chain processes that the virus has exposed,” Jaffer tells “Business owners are choosing to increase their stock in storage, holding more ‘safety inventory’ to respond to backlogged consumer demand and to prepare for any future supply chain disruptions. This mass increase in inventory will also drive demand for warehouse space.”

Lastly, the necessary adaptations to supply chain strategy are driving new demand in the market. Holes have been poked in the multi-tiered supply chain set-up, where one warehouse depends on another. A strategy already complicated by trade tariffs and labor costs, many retailers are moving to an omni-channel approach and diversifying manufacturing facilities. These changes in favor of supply chain resilience will decentralize the market and drive demand in new places, says Jaffer.

“Market interest is drifting away from Mainland China and toward the industrial markets of Asia, Europe, Mexico and the United States. More retailers are adding omni-channel facilities outside of China in addition to operations already in place,” Jaffer tells “In CBRE’s market report, industrial markets near populated areas are predicted to demonstrate high resilience throughout the recession. Second and tertiary suburban markets might absorb some of the short-term shock as areas more dependent on localized economies, but these too are expected to recover and provide high-yield opportunities to investors interested in a longer game.”

Demand is also expected to differ across property type but larger big-box space has been named by CBRE as the safest bet. The greatest rise in US demand is predicted to be in class-A space. Secondarily, demand from new industries such as e-commerce grocery might drive the need for more final-mile warehouses and distribution centers, facilities where goods remain until delivered to a final customer destination. Heightened interest in these spaces might drive redevelopment projects in the coming years, making modernized urban distribution spaces an asset in the post-COVID market.

One of the sectors faring particularly well is the Bay Area. As active construction continues in the area, all major projects underway are finding tenants, and submarkets have maintained strong occupancy rates despite thousands despite thousands of new square feet being added to the market. The positive unit assumption rate is expected to continue into 2021.

In fact, nearly all of Northern California is performing well in the industrial sector. Leasing activity is two-fold. Major construction projects of big-box class-A space are underway and being introduced to the market at a high level of competition. Additionally, larger companies are leasing partial or entire smaller warehouses for retailers that are newer to the e-commerce model or that might need smaller warehouse space. Amazon, for example, recently committed to leasing a 202,000-square-foot delivery station in one of its buildings in the Napa Logistics Park.

In Oakland, vacancy rates in first quarter remained low: 2.3% and 6% respectively. A sizable increase in e-commerce sales can be largely attributed to sales in grocery, food and beverage. With pressing demand for cold-storage, retail demand warehouse and distribution center space remains high. Demand is also rising steadily from third-party logistics companies and technology companies. Retailers pressed to acquire space in response to a spike in e-commerce sales are anticipating that need to be permanent as higher levels of online orders are expected to outlast the duration of the COVID-19 pandemic.

“In short, supply will play a crucial role in the post-COVID market, and demand for warehouses and distribution centers is only on the rise,” Jaffer tells

Zain Ventures is an investment firm with more than $100 million in assets under management. The company operates a variety of commercial real estate initiatives across the United States with a current portfolio of 21 projects in 11 states plus Washington, DC.

Cuomo postpones NYC tax lien sale yet again

Gov. Andrew Cuomo just extended the ban on the city’s tax lien sale for another month, granting delinquent property owners a fourth reprieve since the start of the pandemic.

The governor signed an executive order Monday delaying lien sales statewide through Nov. 3. Without the order, the city’s lien sale on overdue property taxes, water and sewer bills could have resumed this week.

This marks the fourth time the city’s lien sale has been delayed this year. It was originally scheduled for May, but Mayor Bill de Blasio postponed it until August and then again to September.

Cuomo then barred all municipalities from selling liens until Oct. 4. At the time, the governor’s order superseded a nearly simultaneous announcement by the mayor that the sale would be postponed until Sept. 25.

Representatives for de Blasio did not return requests seeking comment on the latest suspension.

Property owners and elected officials have repeatedly called on the city to delay the sale, which is administered by the Department of Finance. Last week, Assembly members Harvey Epstein and Robert Carroll penned a letter calling on the mayor to end the sale permanently, saying the city should instead convert foreclosed properties into affordable housing for low-income residents.

More than 9,000 properties were eligible for the city’s lien sale as of Aug. 17.

Over Half Of Tech Companies Plan To Dispose Of Real Estate In Coming Months

Technology companies across the country expect to need less office space in the coming years, a sign of falling demand in the commercial real estate market. 

Tenant representation firm Savills released a survey Thursday of 250 technology companies that found 82% anticipate needing less office space over the next 12 to 18 months, and 55% plan to dispose of existing space over that time period. 

This disposal of space is already happening in a big way, with a wave of sublease listings hitting the market, Savills Executive Managing Director Zev Holzman said. 

“Every day there is new sublease space hitting the market from tech companies of all sizes,” Holzman said. “We’re seeing a very steady flow of new subleases hitting the market.”

Holzman said many of the sublease listings are between 10K SF and 20K SF, but one much larger space hit the market in the D.C. area last week. After signing a full-building, 162K SF lease in Herndon in April, Walmart Labs decided to keep its workers remote and instead put the entire space on the sublease market. 

In New York City, Zillow placed more than 150K SF on the sublease market in the third quarter, according to Savills, and Yelp placed a 58K SF office on Fifth Avenue on the sublease market. Among all sublease space put on the market since the coronavirus pandemic began in Manhattan, more than 44% has come from tech companies, according to Savills.

These subleases increase the overall availability of office space on the market and will likely lead to a drop in rents, Holzman said. While building owners seek to maximize income with their leases, tenants looking to sublease space are under more pressure to do a deal quickly than hold out for a higher price. 

“A subtenant who is simply looking to mitigate that expense is going to make a more aggressive deal than a landlord trying to maximize asset value,” Holzman said. “As sublet inventory becomes a greater percent of overall availability, that puts pressure on direct rents.”


Courtesy of Savills

Savills’ survey found 82% of technology companies will likely lease less space than planned, and 55% anticipate disposing of existing space.

Of the 250 technology companies Savills surveyed, 28% were headquartered in the San Francisco Bay Area, 19% were in New York, 12% were in D.C. and 12% were in Los Angeles. About 83% of the respondents have at least two offices. 

The widespread reduction in these companies’ office space needs comes as they expect to keep more people working remotely over the long term.  

Before the pandemic, 7% of the tech companies said they had more than half of their employees working remotely. Now, 22% of the companies said they expect to keep more than half of their workforce remote for the long term, even after a vaccine is available. 

While he sees the percentage of long-term remote workers increasing, Holzman said he expects tech companies will keep some office space and won’t go fully remote. 

“Very few companies are going to be 100% work from home,” he said. “It’s more likely we’re going to see that there will be a greater work from home contingency at every company.”

While having fewer workers in the office is leading technology companies to need less overall space, the pandemic is also pushing many to reduce the density of their workplaces. 

Before the pandemic, 71% of tech companies said their office density target was less than 150 SF per employee. Of those companies, 40% say they have not yet decided on their future density needs, 38% say they plan to increase their square footage per employee, 17% say they don’t plan to change it and 5% plan to reduce it. 

“A number of companies are saying the old model of 125 or 150 SF per employee is dead, and that’s not coming back,” Holzman said.

JPMorgan Upgrades Rocket Companies, Predicts Rotation To Credit-Sensitive Stocks

Rocket Companies Inc RKT 0.84% shares traded slightly higher on Friday after a major Wall Street firm upgraded the stock.

The Analyst: JPMorgan analyst Richard Shane upgraded Rocket Companies from Neutral to Overweight and cut his price target from $31 to $28.50.

The Thesis: Shane said Rocket is both the biggest and the most profitable personal lending and mortgage finance company.

“Rocket has developed an integrated, end-to-end technology platform that is streamlining originations and disrupting a $2T market,” Shane wrote in the note.

He said Rocket is leveraging both scale and efficiency in the large and fragmented mortgage market.

Shane expects to rotate toward more credit-sensitive stocks, potentially creating bullish momentum for Rocket. In addition, he said there is upside to Rocket’s EPS in the second half of 2020 due to gain-on-scale margin improvements and elevated primary/secondary credit spreads.

Rocket subsidiary Quicken Loans is leaning into an extremely strong 2020 housing market. In early September, the company reported a $3.5 billion second-quarter profit on revenue of more than $5 billion. Loan origination volume was a record $72.3 billion for the quarter, up 126% from a year ago.

Earlier this month, Rocket also inked a new advertising deal with popular real estate listings platform

Near-zero interest rates continue to drive an extremely strong U.S. housing market. Housing prices are up 6% from a year ago, according to data analytics firm CoreLogic. In September, the average amount of time it took to sell a home fell to just 54 days, the shortest period since began tracking data back in 2016.

Benzinga’s Take: Investors will be watching to see if the housing market says hot in the fourth quarter and if the deal has any significant impact on Rocket’s numbers.

Mortgages in active forbearance had largest weekly drop since pandemic start

  • The number of mortgages in active forbearance fell by 649K for the week ended Oct. 2, cancelling the slight uptick of prior week, according to Black Knight’s McDash Flash data.
  • That marks the largest single-week decline since the start of pandemic.
  • As of Oct. 2, 2.97M homeowners remain in COVID-19-related forbearance plans, or 5.6% of all active mortgages, down from 6.8% in the previous week as the first wave of forbearances from April are hitting the end of their initial six-month term, Black Knight says.

US Apartments Getting Smaller

Apartment sizes are getting smaller in the US. Research from RCLCO Real Estate Advisors tracked trends in apartment sizes, and found that apartments today are 100 square feet smaller than those built in the 2000s, falling from an average of 1,031 square feet for apartments built from 2000 to 2009 to 931 square feet for apartments built from 2015 to 2019. That is a 9.7% reduction in average apartment size.

Apartment sizes decline most rapidly from 2010 to 2014, when the average apartment size decreased more than 70 square feet or 7.6% to 952 square feet. Apartment sizes then decreased another 2.2% from 2015 to 2019.

The decrease in apartment size is a national trend, and it doesn’t seem to be more pronounced in specific metros, market cost or apartment unit types. In coastal markets, this trend emerged more recently. In both east and west coastal regions, apartments sizes decreased 4% and 5% in the last five years compared to apartments built from 2010 to 2014. In the Midwest and Southern markets, on the other hand, apartment sizes decreased the most in the period from 2010 to 2014, and leveled off in the last five years.

Cost has played more of a factor than market location. In high and moderate-cost markets, apartment sizes have decreased the most significantly. In these markets, apartment sizes decreased 13% in the last five years compared to apartments built in the 2000s. In high-cost markets, building trends—more than housing affordability—have driven the decrease in average apartment size. In moderately priced markets, on the other hand, shrinking apartment sizes can be attributed to residents downsizing from larger homes. This occurred largely in the earlier part of the decade, while apartment sizes have remained stable for the last five years.

Interestingly, smaller apartment units can largely be attributed to changing floorplans and unit mixes. These two factors explain the decrease in apartment size across markets and cost trends. In particular studios as a share of total units have increased across the board, according to RCLCO. Two-bedroom units have decreased from 45% of the total share of units to 34% of total units. This explains the smaller average unit size.

There are two outliers, however, in this trend. Three-bedroom units have actually increased as a share of total units, and have competed with families looking for single-family homes. In addition, the average floorplan size also decreased for studios and one-bedroom apartments, which shows that apartments themselves are decreasing, not merely shifting to smaller unit types.

The pandemic, however, could be causing this trend to reverse. If people continue to work from home into 2021 and beyond, or if companies shift to permanent work-from-home strategies, there could be more demand for larger apartment units. This could mean that new construction apartment plans will be larger. However, increased building costs will make this reversal challenging in high-cost markets and major metros.

How do I show proof of income to rent if I’m self-employed?


I’m self-employed and I’m getting ready to rent a New York City apartment on my own. How do I show proof of income to a landlord?


There are a few ways that you can show proof of income to rent an apartment in New York City as someone who is self-employed, but your landlord might want to see more financial assets and a higher credit rating because your salary can fluctuate month to month. NYC landlords typically want renters who earn an annual salary of at least 40 times the monthly rent.

How do you know if you’re likely to make the grade? Adam Frisch, senior managing director of leasing at Lee & Associates, says renters with good credit, a reasonable income history, and who have been in business for at least two years can make a case for themselves. While the documentation required may vary, depending on the landlord, you can expect to provide a credit check and 1099 forms from at least two years, and bank statements for two to four cycles, as well as some forms of identification.

In addition, since you won’t be able to provide a traditional letter of employment, you should get a certified letter from your accountant that verifies your income to show that your finances are sufficient to rent the apartment. You can also have your accountant outline your cash assets, which might help your landlord approve your application.

A landlord’s decision on whether or not to approve your application can also depend on the type of business that you own. If you own a business that might not seem sustainable, or a business that could easily be impacted by Covid-19, a landlord might feel less comfortable. The same goes if your business has been operating for less than two years.

Your credit is very important when showing proof of income as a self-employed person. Frisch says that he would take a hit on a self-employed person’s credit report more seriously than someone who has a steady income.

If your landlord is on the fence about renting the apartment to you as a self-employed person, you can also try to negotiate. You can offer to pay higher rent, sign a longer lease, or even give up some of the concessions being offered, Frisch says.

Keep in mind that paying extra security deposit is illegal as a result of last year’s changes to the rent laws. In the past, landlords would take a larger deposit upfront to offset the risk of a tenant with shaky finances. 

If your credit or finances don’t meet a landlord’s threshold, you can use a personal guarantor or a guarantor service like Insurent (a Brick Underground sponsor). To qualify for Insurent as a self-employed person, you need to submit either a copy of your tax returns from last year, an accountant’s letter with a copy of your driver’s license or passport, or a copy of your bank/brokerage statement with a form of ID. Your cash assets must be a minimum of 50 times the monthly rent, and you need to have decent to good credit.

Frisch also recommends that you don’t come across as entitled when applying to an apartment as a self-employed person. Be respectful and convey to the landlord that you are interested in trying to work with them. Some landlords are more flexible right now because they likely have more vacancies due to Covid-19, but it doesn’t mean they will approve you without proper proof of income.