As the COVID-19 pandemic ebbs, employers are left wondering how they should run their business, what risks they should be willing to take and what kind of pain could likely be felt. In fact, the business landscape coming out of the pandemic will produce winners and losers.
In the commercial real estate market, for example, foot traffic and occupancy fell amid stay-at-home orders, work-from-home mandates and months of capacity restrictions. A recovery may take some time. “There’s an upside in the long run, but unfortunately [it’s] going to be, you know, ‘a tough row to hoe’,” said Robert Volosin, chief executive officer of the Supermarket Consulting Group.
During an April 30 NJBIZ panel discussion, titled Town Hall – Ask The Experts, Volosin was joined by PKF O’Connor Davies partner Michael Andriolla, Szaferman Lakind partner and Business Development Chair Scott Borsack, Insurance Office of America Managing Director Lloyd Humhrey and Insperity human resources specialist Lori Sweeney. You can watch the full video of the discussion here.
“Lower Manhattan, Manhattan rents are plummeting. Leasing activity is at an all-time low, even worse now than it was after the 2007 recession when Lehman was gone and all these offices opened up,” Volosin continued. “Similar to malls, they will end up getting reused, most likely as residential. … But there’s going to be a lull, it’s going to be a tough time,” he said. “You’re going to see people lose ownership, the equity gets wiped out.” Properties could sell for “pennies on the dollar” he cautioned, and ownership can change hands many times, he added.
With malls losing customers and spending flowing to Amazon and other e-commerce companies, Volosin suggested that malls, like other real estate, will need to be reimagined. They could be repurposed for residential space and senior housing, which have been in short supply. “It can provide a very good marriage … because you can have a walkable downtown and surrounded by residential units,” he added. “Pools can be added, entertainment can be added. It might be a nice place for grandkids to come. Parks can be added to the sea of parking and really make it a town center.” And the mall’s typical easy access to major highway corridors and transit routes means they’re accessible.
With businesses trying to return workers to the office, many will simply have to experiment to find a balance that can make employees and company the most productive. While a full return to the office might not be necessary, a telecommuting-only model has disadvantages. “There’s a level of fatigue over working from home,” Humphrey said. He continued that “the hybrid system” yielded the “best outcome for productivity and creativity” in the workplace.
In addition, the return to the office has turned off many workers, Sweeney said – a problem in industries where face-to-face interactions and collaborations can find no substitute in Zoom meetings. “People [are] saying ‘I want to work from home, it works so well … why are you making me do this when we’ve all proven that job can be done from home’,” she continued.
Sweeney also suggested the adoption of some type of hybrid model. Something as minor as meeting in the office once or twice a week could suffice coming out of the pandemic closures, she suggested. Or in the pursuit of social distancing, employers can stagger the days and times that certain staff report to the office.
Even trickier will be the process of worker safety – masks, vaccines or COVID-19 testing. “It’s always a dialogue,” she said. An employee not wanting to wear a mask may be able to wear a face shield instead. Sweeney added that a vaccine incentive could be better than a vaccine requirement. Worker mandates of any kind – masks or vaccines – are complex.
Sweeney noted that “it’s an area that you want to tread very carefully in.” Masks are one thing, vaccines rise to a whole new level. “[T]he potential fallout of an employer mandating something – they could be accused of being discriminatory,” she said.
And that’s where the carrot, rather than the stick, comes in. “Part of the American Rescue Plan Act covers paid sick time for going to get your vaccine,” she said. “If you want to say to employees, ‘hey we’ll give you the afternoon off, the day off if you’re going to get the vaccine and we’re going to give you the next day off’.”
Andriola noted that a particular headache for businesses will be in the accounts receivable departments – going after other businesses that owe them money. “People are very hesitant to part with cash. A lot of people are trying to avoid … making payments as long as possible to give themselves that liquidity and the extra financial protection,” he said. Going after those companies, especially the many businesses that very likely went under during the pandemic, will be a problem, he said.
Hospitality sectors, brick and mortar retail and travel were especially hard-hit by the pandemic. “It’s going to take years for those sectors to come back,” Borsack said.
Given the uncertainty surrounding the spread of COVID-19 and the restrictions imposed to slow it, business owners must calculate how long their current configuration will be workable. “Before you go and retrofit your entire company, business, office space, try to project out how long are some of these restrictions are going to last and is your investment and reconfiguration going to be worth a long-term kind of plan or is this something that … you’re jumping the gun, you’re being too aggressive, you’re doing too much, and maybe it’s just … wait it out a little bit longer to see if it’s something permanent or something that’s going to be temporary in nature,” Andriola said.
Humphrey noted that a particular headache for business owners is gauging just what type of insurance could help them recoup some of their financial losses during the pandemic. Businesses are struggling to get the COVID-19 shutdowns covered. “There’s a lot of … action around the country that is trying to push for legislation in all the states and even in the federal government that would retroactively push the requirement of the insurance companies to respond to the losses” from the pandemic, Humphrey said. “I don’t think it’s going to hold up constitutionally.”
“If the insurance company just paid the claims for all businesses that are 50 employees or less, you would use up in less than three months all the reserves for claims-paying that exist in the entire industry throughout the world.”