Boston Properties CEO Owen Thomas told CNBC on Thursday that working from home does not replace physical offices in the long term, arguing that many changes in activity linked to the coronavirus are temporary.
“The ability to mentor younger employees, the spontaneous collaboration and creativity that occurs, as well as the culture that companies develop, it is very difficult to do when we are all on Zoom” or the Webex videoconferencing platforms of Cisco said Thomas on “Squawk Box”. . “
A massive transition to a post-coronavirus culture of homework would hurt Boston Properties, whose office building activities depend on company leases.
Thomas said the return to the office will be gradual as the presence of the pandemic remains. But he said there is already evidence that companies appreciate having an office, highlighting the efforts of some companies to install smaller satellite offices in the suburbs instead of requiring a large part of their hand. -of work goes to the city center.
“Think carefully about what that says. Companies say,” Look, we don’t want to work from home. We want our employees to be in a physical office, so we are going to rent something in the suburbs in the short term so that we can put them all together, ” he said.
Thomas, whose company has a portfolio of 193 properties with large presences in New York, Los Angeles, San Francisco, Boston and Washington, said it thought many of the suburban offices created in response to the Covid-19 epidemic would be temporary. He said that over time, the value of urban workplaces would come back.
“When the risks of the virus go away, for whatever reason, I think businesses will return to the city,” he said. “Knowledge workers, talented workers want to come together in cities. They want to be together. They want to experience the culture and the excitement of big cities. They will come back, and that’s why the employers are there, because ‘They want to attract the Talent. “
Thomas said Boston Properties collected 96% to 97% of its rents from office tenants in April. By including its small number of retail tenants, the company collectively collected a percentage of rent in the “low 90s,” he said. The company has yet to announce the May collections, he said, but they are also “very supportive”.
According to its 2019 annual reportAt the end of December, Boston Properties’ main tenants included the federal government, Salesforce, WeWork, Bank of America, Alphabet’s Google and Snap. The Real Estate Investment Trust, or REIT, has a market valuation of $ 12.5 billion. Boston Properties’ shares were down on Thursday and fell more than 40% in 2020.
The coronavirus pandemic has put pressure on all sectors of the economy, from retail to hotels, travel and entertainment. The real estate sector has received little immunity as commercial and residential tenants struggle to meet their rent obligations. The current difficulties of the industry rub shoulders with important questions about its future.
Twitter and Square, both chaired by Jack Dorsey, have already announced that they will let most employees work from home permanently. Google said it will allow employees to work from home until the end of the year. The Nationwide insurance company, in contrast, said it accelerate its transition to a “hybrid business model”, with employees on only four main campuses continuing to work from the office. In most other locations, employees will work remotely.