Developers rethink the office after coronavirus
Scott Rechler, chief executive of RXR Realty, had just finalised a white paper for one of New York’s largest office developers when the coronavirus pandemic shut down the city. The paper had been intended to guide RXR’s decisions for the year ahead. Rechler binned the document. “It became irrelevant,” he explains. Months later, he and his team produced a new version. But this one did not feature the usual strong convictions. Instead, it was a collection of questions about the future of the office, the future of work, and the future of New York City — the same uncertainties now puzzling property developers, politicians, and chief executives across America’s largest metropolis. Rechler still believes New York City has a bright future — and so, too, the office towers that sustain it. However, he knows they will have to change.
“Companies will experiment with a hybrid approach,” Speyer says. “But most CEOs, in candid conversations, acknowledge and emphasise the importance that the workplace has to the future of their business because of the importance it has to the future of their culture.”
“Pre-Covid, it was a nice thing to have, post-Covid it’s a need to have,” he says of such amenities. “That’s the difference.” This all costs money. RXR is spending about $50m to spruce up one building, 5 Times Square, after its anchor tenant’s lease expired last year. That may be cheaper than the alternative. “There will be some buildings . . . that are not going to be able to make it post-Covid,” Rechler says. “They’re going to be too commodity-like, and they’re going to be competitively obsolete.”