But what does a post-pandemic environment look like for bankers, real-estate professionals, property owners, and commercial renters? That depends on a variety of factors, says Lindsay Weichert, senior VP, commercial banking group manager at Community Bank, N.A. in DeWitt, but changes are definitely happening. Some of the biggest changes are in the office sector, which […]
But what does a post-pandemic environment look like for bankers, real-estate professionals, property owners, and commercial renters? That depends on a variety of factors, says Lindsay Weichert, senior VP, commercial banking group manager at Community Bank, N.A. in DeWitt, but changes are definitely happening.
Some of the biggest changes are in the office sector, which is going through a bit of a weakening period as many people continue working from home, at least some of the time, and office space isn’t as in-demand.
During the pandemic, businesses learned “workers can be productive and get their job done from home,” she says. That is evidenced by the national office vacancy rate hovering between 16 percent and 18 percent, she adds.
“It’s been steadily ticking up over time,” Weichert says of the rate. In fact, when you factor in the number of companies putting out space for sub-lease, the true vacancy rate is probably closer to 20-22 percent.
During the pandemic when companies didn’t know how things were going to shake out, the sector saw a lot of short-term lease extensions, Weichert says. Now, companies have a much better idea what they need, not only in terms of space but also of what they need included in that space, which on average is only 45 percent occupied by employees.
“Tenants are taking the opportunity to retrench and really understand their needs,” she says. That means smarter use of space, new leases, and “cool perks” like couches, bookshelves, and even fireplaces, according to Weichert. “That’s kind of a trend that’s going on. Making the workspace a little homier.”
That means property owners need to get a little more competitive to land tenants.
On the other end of the spectrum, the retail sector, which Weichert says has been overbuilt since the 1970s, is rebounding nicely with a vacancy rate of about 6 percent. New store openings currently exceed store closings, she adds.
The hotel sector is perhaps the slowest to recover, according to Weichert, and is still in the recovery phase. While travel has bounced back to pre-COVID levels, it remains primarily on the leisure side.
“The business travel ... as well as group demand, that’s been a little slower to return,” she says.
What does this all mean for commercial lending? The pipeline is slowing down, especially when rising interest rates and increased costs for materials and supplies are factored in, Weichert says.
However, Micron Technologies and its semiconductor plant could change things, she notes, with things needing to be built in a hurry.
Housing will be high on that list, and developers are already getting sites ready to go, she says. There will also be rapid development in the ancillary industries that serve the semiconductor industry, she predicts, similar to the way the Intel battery plant in Columbus, Ohio spurred other development.
“I think things are definitely headed in a positive trajectory,” Weichert says. “There is a whole level of possible growth we could see.”
As commercial banking group manager, Weichert oversees two lending teams with a staff of about eight. One team focuses on Onondaga, Cayuga, and Oswego counties, while the other team concentrates on the North Country.
Community Bank is the banking subsidiary of Community Bank System, Inc. (NYSE: CBU), which operates more than 215 branches across New York, northeastern Pennsylvania, Vermont, and western Massachusetts. Headquartered in DeWitt, Community Bank System has more than $15.5 billion in assets.