Streaming Chicago Pt. 3

Over the past few months, we've continually been asked to share our view of COVID-19 and its implications on the market. In live Streaming Part 1, my partner in Stream’s Chicago office, Adam Showalter, discussed the future office, suburbanization, the comeback of the private office and new ways to collaborate in a post-COVID world. In live Streaming Part 2, we reviewed the landscape of Chicago coworking and Stream’s proprietary solution, Rapid Office™ – powered by Stream, developed to assist coworking operators and landlords with their exposure related to coworking space. Now in Live Streaming Part 3, I'll share my thoughts on work from home productivity and the rise of the neighborhood office.

Please know, the intent of this series is not to provide answers that appear to be complete or authoritative. Its purpose is to share our opinion on what we believe will transpire, based on our market knowledge and experience. Hopefully, none of us will ever experience anything like a global pandemic again, but we believe what we experience will make us better professionals — and more importantly — better human beings. Patrick Russo Managing Director Stream Realty Partners

The morning of June 15, 2020 was my first day back in the office after 90 days of mandatory work from home, and I could not have been more excited. On a personal level, however, I loved working from home with my family for the last 90 days. When I partnered with Stream in early June of 2019 to help open our downtown Chicago office, I never imagined I would be working from home for the last three months of my first year. The first nine months of my time at Stream can best be described as fast and furious — opening an office, building a services business, sourcing acquisitions, and recruiting a team in multiple product types. It's no small task, but it is what I signed up for. I was excited for the opportunity Stream offered me, and I have loved the challenge. When I began my journey at Stream, I did not fully realize how much time I would be spending away from home to help build this office. On March 26, 2019 my son was born, and my wife and I could not have been more happy or proud. After a brief two-week paternity leave, I was back at work and in the process of transitioning to Stream by late May. There were times during my first nine months when I knew I should have been home instead of taking another meeting or working late, but my wife and I made the decision together that we were going to make this opportunity work. I did not slow down until Friday, March 13th when COVID shook our entire world. At the beginning of quarantine, I was frustrated and distracted by the momentum I felt like we had lost and all the speculative information being presented by the media. After two weeks and some solid advice from my wife, I turned off Bloomberg and focused on staying positive, keeping our active deals alive and thinking creatively about the future. Most importantly, I realized that it was time to get to know my son and support my family in a way that was not just going out and working hard each day at the office. It was time for me to take on the challenge of being a fully-present father and professional. The last ninety days with my family have been some of the happiest of my life and I feel blessed that I had this time with them the way we did. As I helped my family at home, I found myself being more productive in my remote work environment than I was in the beginning of quarantine. My wife and I had finally developed a harmonious routine of childcare, and I was finding ways to think creatively again with our team. This burst of remote productivity personally lasted for about 60 days, until the Microsoft Teams/ Zoom/ Google Hangouts fatigue set in.

I am thankful that Stream IT implemented Microsoft Teams in early 2020 before we were all taking COVID-19 seriously. Microsoft Teams is an incredible tool and has made us all more connected and productive during quarantine, but a video call is not the same as an in-person meeting. I love what I do, and I love the Commercial Real Estate (CRE) industry, but we operate in a tangible asset class as operators. Often times, when you ask a recent college graduate why they are interested in CRE, they say, “Because it’s tangible. I can reach out and touch it. I love the bricks and sticks.” As overused as that statement is, there is some truth to it, and it runs through most of us who are leading organizations in this industry. Trying to do my job over Microsoft Teams or Zoom was possible, but it just was not the same and I found myself feeling less productive with each day I spent without my colleagues. I realize that some companies are already saying that they are going to allow their employees to work from home permanently, while others are starting to phase back into the office and some never left. Regardless of where your company falls on the spectrum, I find it hard to believe that we will all be as productive working from home as we were pre-COVID. Because we

have an amazing team of driven, best-in-class professionals, it was easy to keep my colleagues motivated during quarantine and stay motived myself due to Microsoft Teams access. However, personally there was NOTHING TO DO during quarantine but work, hang with my family and walk the dog. What do these companies that are now permanently working from home look like from a productivity standpoint, when we have a predominately vaccinated population and COVID-19 is a distant memory with an open economy? I do not know the answer, but one thing that I do know is a fact is that overall I am more productive, collaborative and a better leader in the office.

Chicago is a city of neighborhoods. Technically 50 neighborhoods, but we call them Wards in the Windy City. Each one is unique and has special quality that makes it different. This is one of the things that attracted me to the city as a young post-graduate, fresh out of Michigan State University. Like our neighborhoods, Chicago is home to a truly diverse economy and is a large contributor to why 37 of the Fortune 500 Companies have made it their HQ. Per Moody’s Investor Services, Chicago ranks 1st in largest US metros for economic diversity. Our central location, strong and diverse economy, infrastructure, and culture make us a global city and an unrivaled talent pool for growing companies. Like many other American cities in the past ten years, Chicago has experienced a renaissance of urbanization with more companies and people moving back to the Central Business District (CBD). United, Kraft Heinz, Mondelez, McDonald’s, Motorola, ConAgra, Nielsen, Uber, SalesForce, Facebook are just a few of the major companies that have opened new or relocated offices to Chicago’s CBD. Their main goal in relocating was not economically driven, but talent driven. As a millennial who is a Chicago resident and within that talent pool, I can tell you we choose to live and work in the city for culture and flexibility. I would rather take a bus or train to get to the office than sit in my car for an hour each way on the expressway. Now that COVID has challenged the way we operate professionally, all of the same companies that moved major operations to central business districts are evaluating what to do with their office space and how to meet their current and future needs for growth and talent. In Chicago, most of our office growth, from a development and leasing prospective, has taken place in the West Loop and Fulton Market over the last ten years in high-rise towers. These two submarkets represent over 51 million square feet of Chicago’s downtown office Class A & B market. In the post-COVID office world, high-rise towers with numerous elevator banks, transfer floors, shared amenities, shared HVAC systems, limited parking, multi-tenant floors and without hands-free security access present problems for companies trying to manage employee health and safety. As companies and landlords work through creating safe and secure work environments in their office towers, I believe a city like Chicago could see a rise in neighborhood office. Neighborhoods like Lincoln Park, Lakeview, Roscoe Village, Logan Square, Wicker Park, Buck Town, West Town, Pilsen, Bridgeport, Bronzeville all have the makings of excellent office markets. They have direct access to public transit, diverse culture, restaurants and bars, abundant inexpensive parking, and all are closer to the suburbs than the more traditional CBD office submarkets. Some developers have already bet on neighborhood mega-developments, including Lincoln Yards, The 78, Goose Island, Pilsen and the former Michael Reese Hospital Site. While land assemblage is sometimes more difficult in neighborhoods, I believe we will continue to see this trend take hold over the next few years, as companies determine their post-COVID space needs and requirements.

With the pending sublease title wave of downtown office space coming back to the market and over 3.2 million square feet of coworking in greater Chicago, landlords are going to have to find a way to make office space and leasing as flexible as possible in an every-changing landscape. In short, it might be time to ReWork WeWork.

The office markets are unpredictable, but coworking and flex office are mercurial... tune in next week.

Productivity

The Rise of Neighborhood Office

What’s Next?

By: Patrick Russo

www.streamrealty.com