OMNI Realty Group
  • Email
  • Facebook
  • Linkedin
  • Twitter
  • Rss
  • Home
  • Omni Advantage
    • Success Stories
    • Our Clients
    • Completed Deals
    • In the News
  • Services
  • Resources
    • Market Reports
    • Local Market
    • Office Space Calculator
    • CCIM Advantage
      • User Investment
      • CCIM Brochure
      • Total Expertise
      • Distinguish Yourself
      • How Would You Rate
  • Global Reach
  • Property Search
  • FAQ
  • Blog
  • Contact Us

Posts tagged "COVID"

Home» Posts tagged "COVID"

The Pandemic’s Uneven Effect on Consumer Spending

Posted on December 30, 2020 by Mike Kushner in Blog, Retail No Comments

When COVID-19 hit and the U.S. went into full lockdown, consumer spending took a sharp turn. Heading out to restaurants, bars, concerts, or the movies was no longer an option. Even now, nine months later, we are far from returning to how things were. The general public is wary or deterred by new policies like limited capacity, wearing face masks, and social distancing. This has all had a profound impact on how we’re spending our money, particularly on services or experiences. Instead, we’ve shifted our spending to physical goods to find other means of entertainment and enjoyment, and to make our homes more comfortable, because we’re spending considerably more time at home.

Considering all of this, plus the fact that 10+ million Americans are still jobless, the sluggish recovery of consumer spending on services is cause for concern. At the same time, retailers selling goods, especially online and through contact-free delivery, are in a position to grow their market share. Keep reading to learn how COVID-19 has had an uneven impact on spending, and what this might mean for our economy and commercial real estate long-term.

Spending Shifts from Services to Goods

Based on data from U.S. Bureau of Economic Analysis, spending on goods quickly recovered from the initial shock of the pandemic, returning to growth as early as June. But consumer spending on services is still more than 6 percent off pre-pandemic levels.

The reasoning behind these numbers is straightforward. As the pandemic severely limited people’s option to spend money on services such as dining out, traveling, and other leisurely activities, their spending shifted to physical goods because this was both more accessible and deemed the safer option for enjoyment and entertainment. People weren’t visiting public pools or taking vacations, so spending on items like swimming pools, bicycles, kayaks, etc. skyrocketed. For many retailers, these items were out of stock nearly all summer.

Furthermore, people began reallocating discretionary income formerly used for travel and entertainment to home improvements and renovations. We saw things like new appliances, cabinetry, and mattresses run out of stock while hotels, restaurants, casinos, and event venues sit vacant.

A Double-Edged Sword for Economic Recovery

While it’s certainly positive to see overall spending levels recover relatively quickly, the slow recovery of consumer spending on services is concerning for several reasons. First, the United States is a service economy, as the U.S. GDP reveals. In 2019, personal consumption expenditure on services accounted for 47 percent of the gross domestic product, making it by far the biggest contributor to the country’s economic output.

As the following chart shows, clothing and accessories stores experienced a 30 percent decline in sales compared to the same period of 2019. Similarly, food services and drinking places were hit with a 20 percent spending decline compared to last year’s total. Department stores and electronics experienced a 15 percent decline through three quarters of 2020.

At the other end of the spectrum, non-store retailers, building material and garden dealers, as well as grocery stores, have seen double-digit growth rates in the first nine months of 2020, as consumers shifted much of their spending online and outdoor activities boomed in face of the COVID-19 threat.

What This Means for Retail Locations

Some industries have found ways to safely reopen with limited capacity and new policies in place such as social distancing and mandating facemasks be worn. But even nine months after the start of the pandemic, things are far from “normal” and this includes bottom-line sales. Restaurants, bars, and hotels can only operate at 50% capacity or less which is a huge blow to the amount of business they can do in any given week or month. And shopping at retail locations is quickly being replaced by online shopping.

While some retailers have been able to accommodate customers online, many others, particularly small businesses and boutiques, were not equipped to make this shift. For businesses already on the brink of making ends meet, the pandemic was the straw, rather the wrecking ball, that broke the camel’s back. We see shopping centers with major vacancies and entire chains of corporate stores and restaurants bow out of business.

For commercial real estate, especially shopping centers and malls, the future is bleak. In contrast industrial real estate is rising in demand because of big online retailers needing to increase their storage and rapid distribution. People want their essentials (and even non-essentials) delivered quickly to their door-step. With businesses like Amazon offering free 2-day delivery for most items, ample and accessible storage facilities have never been more important.

And for consumers, the biggest takeaway from this major shift in spending is to be mindful and intentional about how and where you invest your resources. How we spend impacts the economy. Though you may hear phrases like “shop local” and think your individual spending is just a drop in the bucket, when all those drops are put together, it has a large impact. For those that don’t feel comfortable dining out, you can still support your local restaurants through takeout or delivery. And if you don’t desire shopping in-store, consider supporting small businesses through curbside pick-up or having items shipped to your home. Our collective spending habits today, even amidst a pandemic, are painting the picture of our economy well into the future.

Even after the impact of COVID-19 on the economy begins to correct itself, what do you think the impact on consumer spending will be long-term? Comments are welcome below!

[Online Resources] Real Estate, business, buyers agent, christmas shopping, Commercial Real Estate, COVID, COVID-19, CRE, Economy, harrisburg, holiday shopping, Mike Kushner, money, Omni Realty, online shopping, pandemic, pennsylvania, retail, retail shopping, spending, tenant representative

COVID-19 Shines Spotlight on Value of E-Commerce and Industrial Real Estate

Posted on November 16, 2020 by Mike Kushner in Blog No Comments

As we approach the holiday season, and with holiday shopping already in full swing, it’s become a glaring truth that COVID-19 has divided retail companies into two distinct groups: those with functioning e-commerce businesses, and those without.

During the first 10 days of the holiday shopping season, U.S. consumers spent $21.7 billion online, a 21% year-over-year jump, according to Adobe Analytics. This likely stems from the fact that 63% of consumers are avoiding stores and buying more online, with health concerns due to the pandemic driving that decision for 81% of shoppers. Furthermore, U.S. consumers are poised to spend $198.73 billion with online retailers this holiday season. That would be a 43.3% year-over-year jump from $138.65 billion for the same November-December period in 2019.

What this means for businesses hoping to get in on some of these holiday shopping dollars is that they need to have an easy and efficient way for consumers to buy their products online and have them quickly delivered to their doorstep. For many businesses that don’t already have this infrastructure in place, they could sustain a huge blow this holiday season that may be too much to recover from. In contrast, businesses like Amazon and Walmart who are leading the charge in e-commerce are set to have a banner year when it comes to online holiday shopping.

Central PA Region Boasts Strong Market for Industrial Real Estate

In order to support a thriving e-commerce business, it requires ample and functional industrial real estate space to store and distribute massive amounts of inventory. Right here in Central Pennsylvania, Amazon and Walmart remain the most active industrial real estate leasees for Q3 2020. And it makes sense as to why. Amazon is by far the leader of the pack with nearly 13 million square feet of industrial space in this market alone. Coming in second is Walmart with 3 million square feet, and all other players in the field far behind that. This shows just how much of an e-commerce monster Amazon really is and how well prepared they are to take full advantage of this holiday season’s online retail.

And it’s no coincidence that the leading e-commerce businesses have chosen to take stock in the Central Pennsylvania region. The I-81 corridor is widely recognized as a hot spot for industrial real estate, warehousing, and distribution. With easy access to all the major markets and highways, it’s obvious why the Lehigh Valley ranks #7 and Harrisburg ranks #18 on the national list of net absorption as share of inventory. Additionally, Lehigh Valley’s rent growth came in at 4.9% year-over-year, making it among the top 20 cities in the nation.

Industrial Real Estate Trends and Tracking

When we look at the largest industrial leases in Pennsylvania, we can quickly identify the strength of the Central Pennsylvania region and the I-80 Corridor, much of which is occupied by e-commerce businesses.

What’s also interesting to see when mapped out is how the most concentrated industrial real estate markets tend to follow the major roadways, which is what fuels manufacturing, warehousing, and distribution. Quick and convenient access to these roadways is essential for e-commerce businesses who need to deliver product to customers quickly and efficiently.

And with one more graph, we can appreciate the peaks and valleys of constantly shifting vacancies in industrial real estate throughout the Central PA region, the most volatile being Lebanon and most steady being York.

Major Takeaways

The longer the pandemic drags on, the more likely that consumers stick to their new habits. Companies are racing to adapt. The stakes are high, especially for small businesses that were slow to embrace the e-commerce trend and are now desperately trying to catch up. Previously, many retailers might have said e-commerce is a relatively small part of the overall business, maybe 10%. Now that’s grown dramatically to 30% or 40% plus for many retailers and heading into the holiday season with most likely record-setting online sales, businesses who relied on foot-traffic are not likely to rise with the tide.

Even e-commerce giants can’t afford a misstep. This is a pivotal year for all retail and industrial businesses wh rely on manufacturing, storage, and distribution of product to bolster sales. Those who were not prepared for the major shift to online shopping this holiday season will feel it in their bottom line. For those who have not already adapted, the best time is and will always be ‘now.’

 

 

[Online Resources] Real Estate, amazon, businesses, central pa, central pennsylvania, Commercial Real Estate, consumerism, COVID, CRE, distribution, growth, industrial, investors, manufacturing, Mike Kushner, Omni Realty Group, online retail, online sales, online shopping, pa, pandemic, pennsylvania, products, shipping, shopping, space, walmart, warehouse

COVID-19 Prompts Manufacturing Companies to Make Long-Term Changes

Posted on October 28, 2020 by Mike Kushner in Blog, Commercial Real Estate, Industrial, Trends No Comments

According to a new study, more than 90% of companies expect the disruption of global supply chains caused by the pandemic to have long-term effects on their businesses. This has caused manufacturers to closely examine various aspects of their businesses and consider what may need to change, possibly permanently, to adjust to the new COVID-19 reality we are living in.

Furthermore, businesses have begun to realize the importance of continuously monitoring their suppliers, especially those overseas, for risks and disruptions as they try to accommodate many personnel issues, supply chain disruptions, and uncertainty in general.

Keep reading to learn what this new survey and other news sources are reporting about the change to manufacturing and supply chain businesses as the result of the pandemic, and how these changes stand to impact the commercial real estate market.

Widespread Impact in a Variety of Areas

Respondents to the survey estimated that on average about 43% of their entire supply chain suffered some kind of interruption. For the majority of respondents, this was due to fluctuation in supplier pricing and safety restrictions causing orders to be paused or slow to fill. The next most common interruption was the need to find suppliers in other geographic regions due to import/export restrictions, followed by the challenge of suppliers going bankrupt. Many manufacturing businesses didn’t experience just one of these interruptions, but a combination of several which made for an exceptionally chaotic time when COVID-19 first hit. Now that the world has gone on to accept where we are the new reality, at least for the foreseeable future, manufacturing and supply chain industries are shifting from short-term considerations to long-term changes that will make them more stable in the future to sustain a global event in the future.

What this means for commercial real estate: As businesses are reacting to the widespread impact of COVID-19 on manufacturing and supply chain operations, there is a valuable opportunity for commercial real estate owners and investors here in the United States to position their properties as solutions for addressing these changing needs. Businesses may need more space, or a different configuration of space to accommodate their new systems and processes. The more flexible CRE professionals can be with their space, the more they will be able to attract new tenants and even expand their portfolio.

Shift to Reshoring and Nearshoring

In an effort to learn from what this pandemic has already taught us, manufacturing businesses have shifted their focus toward solutions that stand to reduce risk and protect against future shocks as of the likes of COVID-19. Many businesses are taking steps toward retooling their supply chain, and one major shift in mindset is reshoring or nearshoring manufacturing that was once offshore. Reshoring is the process of bringing back overseas supply chain operations to the country of origin and nearshoring is the process of bringing supply vendors closer to the point of origin, from farther overseas destinations. Reshoring and nearshoring an operation’s most vital materials reduces the risk of being held hostage by offshore suppliers.

In that same survey, 97% of respondents said they agree that better visibility into their suppliers is imperative. When various components of a business are broken up and distributed all across the globe, it can be nearly impossible to keep your thumb on all aspects of operations and it can make it harder for these points of operations to communicate effectively with one another. Now more than ever, businesses are seeing the value of keeping their operations within the same country, if and when it’s possible.

What this means for commercial real estate: For commercial real estate owners and investors, this means the demand for industrial space is going to rise. As businesses look to retool their supply chain and bring components back to the United States, they will inevitably seek more warehousing and manufacturing space to accommodate their growing needs.

The Smartest Businesses Are Acting Now

In such a challenging environment, the most forward-thinking businesses are not wasting time addressing vulnerabilities in their supply chains. Many respondents (98%) are planning to take some kind of action to build resilience against future disruptions – and the top courses of action are identifying and employing alternative suppliers, continuous monitoring, and increasing reshoring capabilities. Additionally, diversifying or localizing supply chains are a way to reduce costs, as well as better prepare for future economic disturbances.

What this means for commercial real estate: Now is the time to position your CRE assets as solutions for manufacturing and supply chain businesses. If your space is a fit for such needs, you should market it as such. Be direct in the unique benefits your space can provide a business. For industrial businesses, this means a large and functional space located conveniently for transportation. The Central Pennsylvania region is accessible to major cities and transportation hubs on the East Coast. Commercial real estate space along the I-81 and I-83 corridors will benefit from any beefing up of supply chains and logistics in this area.

With the impact of COVID-19 causing many manufacturing businesses’ to change how and where they make, store, and transport goods, the silver lining is that the Central Pennsylvania is likely to experience an increase in demand for industrial and manufacturing space. This will in turn drive new construction, bring more jobs to the area, and strengthen the overall economy. This is not to overlook the many significant challenges the pandemic has caused to all industries, but it’s at least one path that is headed in the right direction, particularly for industrial real estate in Central PA.

Do you have a question or idea related to manufacturing, commercial real estate, and COVID-19? Join the conversation by leaving a comment below.

[Online Resources] Real Estate, agent, business, businesses, central pennsylvania, Commercial Real Estate, commercial real estate broker, commercial real estate invement, COVID, COVID-19, CRE, distribution, global, harrisburg, industrial, industrial supply chain, Mike Kushner, Omni Realty Group, onshore, overseas, pandemic, pennsylvania, processes, shipping, space, tenant representative, transportation, warehouse, warehousing

COVID-19 Crushes an Already Delicate Retail Real Estate Market

Posted on September 1, 2020 by Mike Kushner in Blog, Local Market, Retail No Comments

You don’t have to dig far into the news before you’re hit with another announcement of a retail store closing its doors and filing for bankruptcy due to the global pandemic. For many retail businesses who were already in debt before the hit of COVID-19, this blow has proven to be one from which many businesses will not recover.

It’s reported that as many as 25,000 stores could shutter their doors in 2020 due to COVID-19 impact. This is 10,000 more than the previously estimated 15,000 stores that would close this year following a record number of closings in 2019 and the liquidation of chains like Payless ShoeSource, Gymboree and Dressbarn. And it appears this is only the beginning. The list of retailers filing for bankruptcy since just May now includes RTW Retailwinds, Lucky Brand, J.C. Penney, Brooks Brothers, Sur La Table, Neiman Marcus, Tuesday Morning, GNC Holdings and J. Crew.

In filing for bankruptcy, some retailers like Pier 1 Imports will close all of their stores permanently, while others like Victoria’s Secret and J.C. Penney, will only close 250 and 154 store respectively, but plan to keep the rest open at this time. Even the biggest brands like Starbucks are facing closures even though just moths prior drive-thru lines wrapped around the coffee shop most mornings. They are set to close 400 company-owned locations over the next 18 months. As People stated, it’s essentially every household name brand who is filing for bankruptcy or closing stores amid the pandemic.

A Crisis for Shopping Malls

Interestingly, it’s estimated that approximately 55%-60% of all store closures will be mall-based. This will result in heavily vacant malls that can’t attract the shoppers it once did, possibly forcing more store closures or the closure of the entire mall. As this sweeps across the nation, we will face large, unused commercial retail space with no fast or easy way for owners and investors of CRE properties to recoup their loss.

The challenges surrounding department store closures are unique and especially problematic for malls not just because of the foot traffic they’re supposed to deliver. Many malls also have clauses in their leases that allow other, smaller tenants to leave if anchor tenants drop out. So once retailers like J.C. Penney close this could open the flood gate for massive departures from smaller stores, without any real course of action from the malls.

This begs the question, can shopping malls survive the coronavirus pandemic with the reality of massive, permanent store closings?

Before COVID-19, shopping malls were just beginning to again hit their stride for those who smartly adapted to the shift to online retail. Many had gone to great lengths to incorporate more dining, entertainment, and fitness and personal services into their offerings to attract people to do more than just shop. Now that the pandemic has hit, all of these in-person past times have been severely impacted and forced to reduce occupancies or close entirely. As USA Today shared, “The whole business model of a mall, which is about pulling in as many people as you can and getting them to stay for as long as you can, has just unraveled.”

Analysts at Coresight Research predict a bleak future for shopping malls. They project that about 25% of America’s malls will disappear within the next three to five years. But add that this could rise to as many as 50% if we can’t stop the bleeding. If this happens, the face of America and the way people spend their time and make retail purchases will drastically change even more than they already have.

A Silver Lining – For a Lucky Few

What’s interesting to note is that some retailers have flourished during the pandemic. For these retail stores, nearly all of them – such as Walmart, Target, Kroger and Home Depot – offered essential services of some kind, including groceries and home improvement goods. Few are typically located in malls. And as we know for a while there, if you were a retailer who provided paper goods or sanitizer and cleaning supplies, your business instantly boomed beginning in March.

Additionally, these “big box” businesses are well poised to also benefit from online shopping, already having the infrastructure in place and the warehousing to store and ship items efficiently. For many smaller retailers and especially boutique businesses, it simply isn’t possible to adjust this quickly or finance it.

For retailers who remain hopeful that there will again be a day when people can get back to shopping like they did pre-COVID-19, it’s usually with the belief there will be a vaccine in the next 12-18 months. Unfortunately the reality is many businesses will not survive that long. And for the strong who do survive, they will surely feel the hit in the short-term.

How do you think such widespread retail closures will impact the way we shop and spend our free time? Better yet, what stands to replace the “experiential” model of shopping malls? Share your thoughts by commenting below.

[Online Resources] Real Estate, agent, bankruptcy, broker, central pa, closing, closures, covi-19, COVID, COVID19, entertainment, impact, local market, mall, money, pandemic, pennsylvania, restaurants, retail, retail real estate, shopping, shopping mall, shut down, stores, tenant representative

The Millworks Shares How COVID-19 Has Impacted the Restaurant Industry

Posted on August 23, 2020 by Mike Kushner in Blog, Local Market No Comments

Like most industries, the restaurant industry has faced a sudden and unavoidable need to adapt to the changes amidst COVID-19. Nationwide, restaurants that could typically pack their tables during mealtimes, happy hours, and late night gatherings were forced to shutter their locations for weeks, even months on end. And now, even though restaurants in Pennsylvania were allowed to again open their doors, it’s far from business as usual.

Although this was a huge blow to our restaurants, one thing is certain: people always need to eat. This means that so long as restaurants can find a way to safely prepare and serve food, there is demand for their services. Restaurants have adapted by expanding their outdoor seating, limiting tables in use, offering contactless, curb-side pickup, frequently sanitizing common spaces, and of course requiring face masks for both staff and guests. The question now is how sustainable is this model? And can restaurants anticipate their revenue to pick back up?

To provide a local perspective as to what’s going on here in Central Pennsylvania and how the restaurant industry has had to make rapid and drastic changes to the way they do business, Omni Realty Group reached out to a Harrisburg restauranteur. Josh Kesler, owner of The Millworks located in downtown Harrisburg, joins us to weigh in on how his business has been impacted by COVID-19 and how he has adapted to changing circumstances.

Omni: Describe how The Millworks has been impacted by COVID-19 and your decision to temporarily close.

JK: After being closed for several months during the initial shutdown, we were excited to get back open, even at a more limited capacity of 50% in Pennsylvania. But several weeks after reopening, we had a staff member test positive for COVID-19. We immediately closed again pending test results. Because of testing delays, several days turned into several weeks, and I ultimately made the decision that we wouldn’t be able to function by closing every time an employee tested positive. So for that reason we are closing operations until there is at least one of the following: sustained down swing in new case numbers, a COVID-19 treatment that greatly reduces the death rate, or a vaccine.

But the circumstances are vastly different for many restaurants. Ones that were positioned pre-COVID-19 with a robust take-out business have been better able to transition into the new environment. Others, such as The Millworks, is a destination business that has built its core from experiential dining and shopping. So there’s no ‘one size fits all’ approach to how to react to the situation. It’s really dependent on the market positioning before the pandemic. Some restaurants are also struggling with converting to a take-out model because of the adjustment in office work. For years take-out was really location driven, i.e. grab a bite to-go on your way home from the office. But with most people working from home, traffic trajectories have changed greatly. Proximity to residences, not offices, is the key. And that factor may continue to play out after the pandemic if businesses decide not to carry the expense of office space.

Omni: Looking to the future when and how do you plan to resume business? What factors will play into this decision?

JK: Our handling of the virus will ultimately decide when the best time to reopen is. If new infections decrease, I think we all hope that the Governor will loosen the capacity restrictions on bars and restaurants. At the current 25% capacity restriction and colder weather approaching (losing outdoor dining), it doesn’t seem viable for most restaurants to weather that sort of downturn. Remember, most dine-in restaurants survive to a large degree on alcohol sales, and with bar service limited and general capacity reduced, the economics become difficult.

The timing of losing outdoor dining is also coupled with the end of the PPP for most restaurants, and I believe staffing and overhead will become too great for many to continue forward. Fortunately for The Millworks, I have built a solid war chest that will be able to sustain us for an extended shutdown, but I do worry that many of my colleagues won’t be able to, and I really feel for them right now.

Omni: How are you using the adjustments due to COVID-19 to reinvest in your business, such as renovations, changes, or improvements?

JK: I’ve really limited expenditures on improvements to pivot to the new COVID-19 reality, for no other reason than that the reality is changing rapidly, sometimes daily.

Omni: Of the staff you have retained during this time, how have their roles and duties shifted?

JK: At the current time, all but two of my 85 employees are laid off. It is by far the single greatest feeling of defeat, having had to lay off staff that have been the foundation and fabric of my business. But in the end, by making the decisions I have and by years of positioning before the crisis, I can guarantee all of them a job on the other side of this. I’m sure there are varying political views, but I strongly urge the support of extended unemployment insurance for restaurant workers until we get past this crisis. The looming income shortfalls will force millions of talented people to seek careers in other industries. That is already happening to some degree.

Omni: Is there any silver lining you have found through all of this?

JK: As dire as all of this sounds, I do think those who survive the crisis will flourish on the other side. It may take some time for all of us to readjust our habits, but let’s face it, restaurants are critical in how we enjoy time with our friends, family, and co-workers. It’s like going to church, or the baseball game, or the backyard barbeque. It’s just who we are and what we do as people, and there will never be a shortage of that over the long term.

***

Omni Realty Group thanks Josh Kesler for sharing his insight and experiences adapting to COVID-19. Each restaurant has taken a unique approach to adapting to COVID-19, and it’s very interesting to learn the thought behind the changes and future adjustments that may still be yet to come.

As it relates to commercial real estate, one of the biggest obstacles is making the best use of whatever space you have, whether that’s looking to add outdoor seating, reconfigure your indoor seating to accommodate social distancing, or choosing to downsize if business demand is down. For restaurants owners, what’s most important is to remain flexible creative with your business solutions so that you are in the best position to safely remain open during COVID-19.

Have you patronized a restaurant since COVID-19 hit? Did you dine inside, outside, or get takeout? And what was your basis for this decision? We’d love to hear your perspective on restaurant dining and COVID-19 concerns. Join in the conversation by leaving a comment below.

[Online Resources] Real Estate, bar, beverage, brewery, business, central pa, Commercial Real Estate, coronavirus, COVID, COVID-19, CRE, downtown harrisburg, food, harrisburg, impact, josh kesler, local market, Mike Kushner, Omni Realty Group, pennsylvania, restaurant, restaurant industry, tenant representative, the millworks

How the Pandemic Stands to Impact Property Taxes in PA

Posted on July 22, 2020 by Mike Kushner in Blog, Commercial Real Estate, Local Market, Trends No Comments

School districts in Pennsylvania are working to set their budgets for the 2020-2021 school year, and are potentially facing a $1 billion loss in local revenue as a result of coronavirus, according to the Pennsylvania Association of School Board Officials (PASBO) study. Even if the economy recovers quickly, and there’s no predicting if it will, that still leaves schools with a predicted loss of $850 in revenue.

So how will they make up for the gap? Naturally, the focus shifts to property taxes. Raising property taxes is never a desired solution, but it’s among the most obvious and effective. While some school districts in the capital region are not considering a property tax increase, and instead choosing to cut programs, contract out services to reduce spending, or drawing upon reserves, many others say a tax increase is unavoidable.

Pennsylvania is not unique in this dilemma, just last month Nashville approved a 34% property tax increase to account for revenue loss as a result of COVID-19. For a property appraised at $250,000, that would mean an increase of about $666.25 per year. This tax increase, compounded by any other financial hardships property owners have faced this year is a significant stressor.

It’s important to note that in Pennsylvania that the Act 1 index caps how much school property tax rates can rise. It takes into account the average statewide weekly wage, which is likely to be lower in wake of this pandemic. To go above the index requires state or voter approval.

School districts across the Commonwealth are having their budgetary discussions now. As property owners, it’s important to stay aware of what’s being proposed in case it stands to impact the tax rate on your residential or commercial property. Let’s take a look at a few local school districts to see how they are addressing their budgetary issues and whether this could result in a property tax increase in your township.

Camp Hill School District

The Camp Hill School Board is recommending a 3% tax increase to support its preliminary $24.7 million budget for 2020-21. By going with a tax increase of that size, it left the district facing a $403,458 revenue shortfall as opposed to one that would be double that amount if the tax rate was frozen. The district anticipates a post-COVID-19 loss of nearly $431,000 in local and state revenue so it trimmed its proposed spending by $116,740 to adjust for that. It is looking to use some of its $6.2 million unassigned reserves to bring the budget into balance.

Central Dauphin School District

Central Dauphin School Board says they are looking at every possibility including cutting nearly $300,000 from their budget without giving up things that would pose difficulties for students. The board must next consider approving a preliminary $204.2 million budget that still has a $2.4 million revenue shortfall to close to bring it into balance. The options laid on the table for the board include a mix of ideas that range from no tax increase and dipping into reserves to raising property taxes by the 3.1% allowable tax increase under the Act 1 index.

Cumberland Valley School District

Cumberland Valley School Board feels that a property tax freeze is not feasible for the district. The district anticipates a $3.1 million loss in local revenue, $300,000 in lost interest earnings, and a projected budget deficit of $2.4 million. Without the additional $2.3 million in revenue the district would receive from an Act 1 index allowable property tax increase of 2.6%, the deficit grows to almost $5 million.

Derry Township School District

While no tax increase is expected in the Derry Township School District, it is going to be a challenging year. And Derry Township is in a particularly unique situation. The amusement tax brings in about $1.5 million annually, and with Hersheypark and its related venues being closed due to the coronavirus, that could be a big hit to their bottom line. How they plan to make up for the delta is still in discussion.

Lower Dauphin School District

Lower Dauphin School District has also been dealt a uniquely challenging hand. Not only are they dealing with the financial fallout of the coronavirus like everyone else, but they’re also the school district that’s home to Three Mile Island Nuclear Generation Station. The shutdown of TMI is a loss of roughly $300,000 in payments in addition to taxes that the plant once made. Despite the loss, the school board already approved a budget on Monday, and they were able to make ends meet without raising taxes by borrowing about $4 million from their reserve funds.

Northern York County School District

Northern York was already looking at a $1.5 million shortfall pre-CVOID, which had to do with health insurance increases, pension payments and other increases. Now with the expected loss of close to $1 million in earned income tax and less revenue from realty transfer taxes because of the hold put on real estate activity, that gap grows closer to $3.5 million. To bridge this gap, the district does not plan to increase property taxes, at least yet. Instead, they announced they would cut costs by moving to full day kindergarten which reduces midday transportation. They will also put a hold on any construction or renovation, and outsource its instructional aid duties to an educational agency.

West Shore School District

West Shore School District is anticipating a significant reduction in revenues related to earned income tax. As a result, a budget with a property-tax increase is currently on the table. For West Shore’s Cumberland County communities, it’s a 1.63 percent tax increase, and it’s an increase of 1.16 percent in York County. The budget also relies on $1 million from the school district’s reserves.

How would an increase in property taxes impact you? If you own commercial or residential real estate, this will affect you directly. And even if you don’t own real estate, there will still be a trickledown effect. If you rent your home or place of business, landlords may be forced to increase rent to pass off some of these costs. Or businesses may increase the cost of their goods or services to help balance their own books.

There are many unknowns in our community, government, and economy right now. What we do know is that everyone has endured change and hardship to some degree as the result of the pandemic. School districts, just like all of us, are looking hard for solutions that will keep them afloat while having the least negative impact on teachers, students, and the community.

What is your opinion on increasing property taxes to help school districts make up for financial losses due to COVID-19? Join in the conversation by leaving a comment below.

[Online Resources] Real Estate, budget, central pennsylvania, Commercial Real Estate, coronaviruss, COVID, CVOID, economic downturn, Economy, finances, for sale, home, local economy, local schools, loss, Mike Kushner, money, Omni Realty Group, pennsylvania, property, property tax, public schools, residential real estate, school boards, school districts, schools, tax increase, tax rate, taxes

What Does ‘Back to Business’ Look Like Post-COVID? – Part II

Posted on July 13, 2020 by Mike Kushner in Blog, Commercial Real Estate, Local Market, Retail No Comments

This is Part II in a two-part series where we look at how commercial spaces must adapt and implement new policies to adhere to social distancing guidelines. We interviewed Matt Luttrell, Partner at ThYNK Design LLC for his input on this timely and important topic. In Part I we focused on the issue of square-feet per person requirements in buildings and how this will limit capacity. We also discussed how HVAC systems might be used to create fresh air and healthier work environments. Now, we’re going to shift our focus to other tools and tactics commercial spaces can use to keep the spread of COVID-19 down. Keep reading to find out what these are.

Omni: Aside from greatly adjusting the layout according to social distancing guidelines of commercial spaces, what other changes or precautions could be taken to adhere to revised distancing guidelines in a more efficient and effective manner?

ML: When possible, the ability to predict and schedule activities and users can be a great tool for optimizing the use of space. In K-12 educational environments, the circulation of students and faculty is highly planned and will become even more necessary to ensure that occupant use and density do not overwhelm resources and create unhealthy situations. Likewise, it appears that restaurants will need to enhance and promote reservation systems to manage seating and staff while using delivering and curb-side services for extended patron options. More movie theaters will use on-line reservations and pre-selection of seats. These commonplace practices can have long-term as well as short term benefits and will most likely become more prevalent in our daily experiences.

Omni: You talk about the importance of scheduling as a way for schools and businesses to manage capacity and social distancing. But what about when this is not an option?

ML: When scheduling or reservations are not an option, such as in retail or grocery store settings, human or automated occupancy counters are being used to limit the number of users at any given time. Employing staff to do this can be quite costly, and if we’re honest, not a desirable job. For automated options, there are many venders, such as Sensource, that provide hardware and software that can easily be set up and adapted to an organization or business’s specific needs.

Omni: Beyond limiting capacity in a space, what other precautions can businesses take?

ML: Thermal scanning of customers or guests determines if individuals have an elevated body temperature so that buildings can prevent a person showing symptoms from entering. This is another effective mechanism for controlling the spread of virus. There are readily available systems for small businesses that range from a $100 handheld scanner for checking individual temperatures to group and line screening systems for approximately $5,000. TEquipment.net provides an array of options for consideration.

Additionally, masks seem to be one of the more accessible and more effective tools for moving forward. While they are not 100% effective, it appears that they may significantly reduce transmission via air, which seems to be the primary source. No one seems to want to quantify how effective masks are, but based on common sense, the practice appears warranted. Given the ease, minimal costs, and purported effectiveness, masks seem to be the most readily available option for reopening our society without inundating our current resources.

No system is fail-proof, but simplicity and redundancy are always good principles when evaluating options.

Omni: In your opinion, can common areas like waiting rooms, break rooms, or lobbies realistically adhere to new CDC social distancing guidelines?

ML: These spaces are pinch points within every building. While they are designed to accommodate the building’s occupancy load, they are not intended to minimize interactions; they are generally shared spaces designed for efficiency and ease of use. Accordingly, each type of space has its challenges and should be evaluated for options, but these spaces are inherent barriers without actively implementing changes to a buildings configuration and/or user actions.

Reconfiguration can be a costly endeavor, especially if it is a short-term solution. Repurposing spaces may be a solution that allows for relief. Several areas traditionally found in a building, such as conference rooms and breakrooms, can be repurposed to address immediate needs. Breakrooms may be better utilized as an office or workspace for a limited number of employees, while employees are required to eat at their desks. Conference rooms could also become workspaces, or often, these rooms are located close to or adjoin lobbies/ waiting rooms and can become an extension of the room. These are potential short-term solutions and should involve an evaluation of HVAC, lighting, power, egress, and other potential code implications.

Omni Realty Group thanks Matt Luttrell for sharing this valuable insight to help us to better understand the challenges many business owners face when it comes to renovating and recreating commercial real estate space to accommodate social distancing and sanitization both now, and for what many feel will be long into the future. If you missed Part I of this two-part series, be sure to check it out here.

Do you own or work in a commercial space – office, retail, or industrial? What do you see being the biggest challenge related to COVID-19 required changes? Join in the conversation by leaving a comment below.

[Online Resources] Real Estate, advice, cdc guidelines, changes, Commercial Real Estate, coronavirus, COVID, COVID-19, HVAC, industrial, mike lattrell, office, Office Space, Omni Realty Group, pennsylvania, renovations, retail, social distancing, thynk design, tips

What Does ‘Back to Business’ Look Like Post-COVID? – Part I

Posted on July 8, 2020 by Mike Kushner in Blog, Commercial Real Estate, Local Market, Retail No Comments

Based on the continually evolving data and recommendations, the efforts to mitigate the spread of COVID-19 while pursuing a more normalized personal and professional life has focused on separation, isolation, and decontamination. As things currently stand, it appears that the only potential remedy to return to a pre-COVID-19 environment is the development of a vaccine. In the meantime, business owners and professionals are faced with living with less than ideal situations. Some wish to persist with maximum isolation and separation; however, it appears that the majority have deemed the consequences of shutting down all interactions beyond a household as untenable, and have demanded that measures be developed to support an acceptable level of social and professional interaction. What is acceptable? Well, that is a matter of individual choice.

To help provide some insight on what options exist for businesses to re-open their doors to employees and the public we asked Matt Luttrell, Partner at ThYNK Design LLC, to weigh in. ThYNK Design, LLC is a modern architectural firm pursuing a better way to develop, deliver, and celebrate the immense value of good design. Given his experience and background, Matt shares some valuable information to help frame and evaluate some of the inherent issues in the built environment that conflict with the proposed social distancing guidelines. Here’s how he responded when Omni Realty Group asked him several key questions.

Omni: What industries are likely to be most impacted by the proposed revised building code distancing guidelines?

ML: The restaurant industry may face the greatest short-term and long-term challenges. The proposed social distancing guidelines directly conflict with historic planning principles as well as the industry’s business model. However, each restaurant, business, and building should be evaluated to determine what resources are available to develop an effective mitigation plan.

Omni: How will the introduction of new social distancing constraints impact the long-term viability of most existing buildings?

ML: With the recognition that the design and development of the built environment is in response to many considerations, including; user needs, business models, and building code requirements, the introduction of new constraints that directly conflict with established practices will challenge the long-term viability of most buildings. These challenges focus on developing an environment that effectively manages occupant density, frequency, and duration of interactions, surface contaminants, and air quality. To effectively manage these challenges, an inventory and understanding of the available resources and building configuration are required. These can include: building area, sizes of rooms, type, and capacity of HVAC system, operable windows, number of entry/ exit points from a space or building, quantity, and location of shared facilities (toilet rooms, break rooms, waiting areas) and flex spaces.

Each resource can impact the effectiveness of a mitigation plan and should be carefully considered, but the most significant challenge is how to overcome the area requirements per person. Expanding a building, reconfiguring interior spaces, and adding entry and exit points are not readily done. In addition to the expense, the required time frame for approvals and construction is prohibitive.

Omni: Can you provide more information to paint a picture of the potential magnitude of the problem you’re describing?

ML: The proposed social-distancing guidelines recommend a density of 1 person per 113 SF (area of circle with a 6′ radius) whereas standard planning practices include densities that are 2x to 10x higher.

Following are the maximum area allowances, per the 2015 International Building Code, for several of the more common functions included in buildings:

Assembly spaces:

  • -with concentrated chairs (lecture halls, waiting rooms, etc.):
    • One occupant per 7 SF
  • -standing room (lobbies, areas holding events such as cocktail hours):
    • One occupant per 5 SF
  • -unconcentrated chairs and tables (restaurants, breakrooms, open office)
    • One occupant per 15 SF

Business areas: One occupant per 100 SF

Classroom: One occupant per 20 SF

Exercise rooms: One occupant per 50 SF

Retail: One occupant per 60 SF

Compared to the recommended 113 SF (area of a circle with a 6 radius) per occupant you begin to see the potential implications. As an example, a worst-case analysis would provide the following reductions:

Example 1: For a restaurant with a dining area design occupancy of 100 (15 SF per occupant) the occupancy would be potentially reduced to 13 occupants at 113 SF per occupant. This is a worst case and does not consider that you may have a family grouped so that they are separated from other family groupings.

Example 2: A classroom designed for 25 occupants could have a reduced occupancy of 5.

As indicated by these examples, if we want to remain economically viable, then social distancing cannot be the only criteria for determining the use of a space.

Omni: How do commercial HAVC systems currently play into the issue, whether standing to hurt or help air sanitization and circulation in shared commercial spaces?

ML: For most people, the quality of a HVAC system is based on the system’s ability to control the temperature of a space. Only in the relatively recent past (10-20 years) has the industry focused on delivering improved air quality, increased fresh air, controlled humidity, and energy conservation within the typical system. Each of these four items should be evaluated as a potential resource or barrier for developing a mitigation plan. In the current environment, an incorrect understanding or use could potentially have disastrous consequences and it is highly recommended that a contractor or engineer be consulted to determine the full capability of your system.

Omni: Could you give a bit deeper into the impact of air quality on comfort and health?

ML: Air quality may be one of the more challenging issues when it comes to controlling a virus. One of the more prevalent components for managing air quality is the filter. The systems air-filter is rated according to the level of filtration needed/ desired for a given environment. According to Grainger.com, “What Is MERV Rating? Air Filter Rating Chart,” most commercial and residential buildings will have filters that range from a MERV 5 to MERV 12. A MERV 5 rating filters particles down to a 10.0 micron level and a 12 filters down to 1.0 micron level. A MERV 12 or higher, which is not very common outside of critical healthcare and clean-room environments, effectively filters pollen, dust mites, mold, and even cement dust.

However, according to various publications, the coronavirus average size is 0.125 microns. While this is substantially smaller than the particles that are filtered, it does not mean that these particles freely pass. This is due to a variety of reasons, but one of them has to do with humidity. Dry air allows particles to float freely/ unattached, while humid air promotes particles binding together. The larger particles are more readily filtered or trapped. A similar concept applies to our lungs. When we breathe air that is too dry it reduces the amount of mucus within our bodies; thus, part of our human filtration system is compromised.

Omni: Is there any research to back this up?

ML: A study conducted in Sydney, Australia indicates that the reduced humidity conditions associated with winter weather can lead to an increase in COVID-19 cases. The researchers identified that a 1% decrease in humidity could lead to a 6% increase in cases. So, what is the ideal relative humidity? In this case, it appears that the industry recommended RH of 40% to 60% corresponds with the current recommendations for mitigating COVID-19. Too little humidity and the filtration system is compromised, too much humidity and mold growth is supported.

Omni: So then, how is indoor humidity controlled?

ML: A/C systems are primarily designed for thermal control. Thus, most A/C systems control humidity by circulating warm, moist air over cold coils, which leads to condensation, which is collected and drained away. The key here is ensuring that the AC cycles the proper amount of time to allow the warm air to be adequately circulated over the coils and the moisture removed. This process relies on the A/C unit being correctly sized. This involves a variety of factors, including the number of people in a facility.

In essence, if a system is sized to provide cooling for 100 people, it accounts for the amount of energy/ heat and moisture generated by 100 people. Accordingly, it will work to get the temperature where it needs to be while accounting for the amount of humidity that needs to be removed. If the occupant load is reduced to 50, then the system is effectively oversized and will get the air to the desired temperature before it has a chance to remove the humidity. This leads to RH levels that can far exceed the recommended upper level of 60%.

Omni: What connection do you see between fresh air and healthier work spaces?

ML: Fresh air, or air that is not recycled, has become an integral component in the development of an HVAC system that supports overall occupant health. Sick building syndrome (SBS) developed following efforts to close-up buildings to establish greater energy efficiency, and a quick search will indicate that the SBS symptoms are frighteningly similar to COVID-19. The introduction of fresh air into a HVAC system does two things: it dilutes the air and pollutants, and it helps to pressurize a building. Diluting air is readily understood, but proper pressurization is equally as important. If a building is not properly pressurized, then air can start to stratify and pockets of dead-air form. This can allow areas of a building or room to be filled with contaminated air that can promote the spread of a virus. Most new systems include fresh air as required by the building code, but many older systems do not. A professional should be consulted to determine if your system incorporates fresh air or if it can be modified to do so. Simply put, a properly sized HVAC system that incorporates fresh air is a critical component in supporting occupant health.

As we move forward in this new environment, we seem to come across unforeseen challenges every day. But the response to all challenges is the same: assess, move-forward, reassess, move-forward… The one certainty is that we must be persistent in creatively evaluating the situation and developing solutions based on available resources. Stay tuned for Part II where Matt presents us with even more information on your topic!

Do you own or work in a commercial space – office, retail, or industrial? How do you feel like impact of COVID-19 will require changes be made to the configuration and functionality of your space? Please offer your comments or experiences in the comment section below.

[Online Resources] Real Estate, advice, cdc guidelines, changes, Commercial Real Estate, coronavirus, COVID, COVID-19, HVAC, industrial, mike lattrell, office, Office Space, Omni Realty Group, pennsylvania, renovations, retail, social distancing, thynk design, tips

How Commercial Tenants Can Negotiate Rent Relief During COVID-19

Posted on June 18, 2020 by Mike Kushner in Blog, Commercial Real Estate, Local Market, Tenant Representative/Buyer Agent No Comments

 

Our world remains in a global pandemic and there is a long road to economic recovery. Seemingly overnight, our ways of working, living and playing drastically changed, and we were forced to sustain these changes for weeks and months on end. As a result, businesses closed their doors to the public, some temporarily and some permanently. This has led to the sudden need for these businesses to shed, or at least reduce, their commercial real estate overhead.

Think of it this way. When a business agrees to a rent amount, it does so with the expectation that it will have a certain level of income. All those expectations were upended with COVID-19, as many businesses have been forced to fully close for months or significantly reduce their use of their commercial space. Even though offices, restaurants, and stores are starting to reopen, their capacity for employees and customers — and, therefore, for revenue —remain diminished, making rent renegotiation necessary for staying afloat.

It’s important for commercial tenants who have lost the use of their spaces as a result COVID-19 to understand what options might exist for them to favorably negotiate some form of rent relief from their landlords. Take a look as we examine the key steps any commercial tenant or business owner should take when venturing down the path of lease negotiation.

Know the terms of your current lease.

Start with closely reviewing your current lease. What are the terms, conditions, and pricing you originally agreed to? What does it say about lease negotiations or early termination? Does it give conditions for if and when this would be considered? In order for your lease negotiation to be most effective, you must come armed with all the information related to your lease, and your leasing experience. Upon reviewing your lease, make note of the most important details and write or type those out on paper so that you can have it with you during your conversation. This will help to keep these details top of mind and easily accessible.

Seek representation and advice.

One of the most important things you can do is seek the representation and advice of a commercial tenant representative. This person is different than a real estate agent in that they exclusive represent the rights and interests of commercial tenants, not landlords. A tenant representative, like Omni Realty Group, would help review your current lease, advise you of your best plan for negotiating more favorable lease terms or even an early termination, and represent you at the meeting with your landlord. This not only provides peace of mind, but it gives you the best potential for a favorable outcome.

Be direct and professional with your request.

Schedule a meeting with your landlord and be direct that it’s to discuss your current lease terms. In your meeting, be clear and professional with your communication. Present your plan for new lease terms or early termination just like you would present a product or service to a client or customer. You want to sell your landlord on your plan; therefore, you need to make it clear why he or she should “buy” it.

Back your position with facts and data.

You can expect that your landlord will have questions and rebuttal. Why should he or she grant you new lease terms that are likely more favorable to you than they are to the landlord? Come armed with facts and data that support your plan. And also speak from a point of reason. Explain how your business was impacted by COVID-19. What were your losses or layoffs? How long were your doors closed to customers? And also look to other cities or states where possibly new laws are coming into place to offer rent relief for commercial real estate. This is taking place in California where a new bill, if it becomes law, allows businesses, particularly bars and restaurants, to terminate their lease agreements. While this may not be a law in your state, it’s worth discussing with your landlord how other places are approaching this difficult topic for perspective.

Finally, it’s worthwhile to research and consider how certain lease clauses could play in your favor and back up your position. Force majeure is a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, like COVID-19, takes place. There is also the frustration of purpose doctrine, which comes into play when an unforeseen event undermines a party’s principal purpose for entering into a contract, such as how COVID-19 left many businesses without the need or ability to use their commercial space. And these are just a few examples. Upon more research and seeking legal counsel, there may be additional clauses and doctrines that could protect you in this situation.

Present the benefits of both parties.

Sure, the benefit to your business is clear. Shortening your lease terms or negotiating lower rent for less space will help your business stay afloat financially and shed overhead that is no longer needed as a result of COVID-19. Be sure to also make it clear what could be in the deal for your landlord. Could you recommend a new tenant, such as another business you know? Could you negotiate taking less space rather than leaving the building completely? Or could you reduce the length of your lease, but not terminate it immediately? Another option, if it’s of value to your landlord, is leaving behind desks, chairs, and other office furniture so that the space can be offered as fully furnished to new tenants.

Prioritize what’s most important, and be flexible with the rest.

Go into your discussion with your landlord knowing what you absolutely must accomplish in order for your lease to be sustainable for your business. Maybe this must be lower rent costs, or maybe you need to downsize your space. Try to pick your one most important thing, and then be prepared to make some concessions in other areas. If your landlord is willing to terminate your lease early, he or she may ask to keep your security deposit, or charge for one more month of rent. Or maybe they’re willing to let you downsize your space, but they need you to move to a different floor or location because it makes it more feasible for them to rent out other space. Be willing to listen and to negotiate.

Remember that you have options and support.

Omni Realty Group is working hard to address the ever-changing needs of businesses that have been impacted by COVID-19 and now need to rethink their commercial real estate leases. We want to help be a part of the solution. With the right strategy and presentation of your proposed changes to your lease, it’s reasonable and possible to find a favorable outcome with your landlord. Keep in mind that landlords have also been impacted by COVID-19 in ways you might not imagine. The right tenant representative can help guide you through the complexities of negotiating rent relief, share the most current updates on how they and/or others are addressing similar challenges, and provide the necessary thought leadership to help you make informed decisions.

Has COVID-19 impacted your business’s need for and use of its commercial real estate space? Are you considering asking for new lease terms as a result? If you have a question or need assistance, don’t hesitate to contact Omni Realty Group, Central Pennsylvania’s exclusive commercial tenant representative today.

[Online Resources] Real Estate, business, camp hill, Commercial Real Estate, contract, coronavirus, cost, COVID, COVID-19, CRE, downsize, Economy, financial, harrisburg, hershey, industrial, investor, lancaster, landlord, lease, lemoyne, mechanicsburg, Mike Kushner, money, negotiation, office, Omni Realty Group, owner, pennsylvania, recovery, relief, retail, tenant, tenant representative, terms, york

Commercial Spaces Likely to See New Requirements for HVAC Due to COVID-19

Posted on June 1, 2020 by Mike Kushner in Blog, Commercial Real Estate, Local Market, Trends No Comments

COVID-19 has changed life as we know it. The home office became the new workspace, video conferencing replaced in-person meetings, events shifted to virtual delivery, and parents became homeschool teachers while trying to balance career demands. It’s safe to say that the majority of people are looking forward to a time when they can return to work and feel a sense of normalcy again. One of the most important elements of this being possible in the near future is the ability for businesses to create a safe and sanitary work environment while adhering to CDC guidelines. The sooner this can be accomplished, the sooner commercial spaces can begin to reopen.

Some of the most important considerations are how to effectively filtrate, circulate and sanitize the air in shared and common spaces to reduce the spread of viruses. What options exist to improve air filtration and sanitization in shared office, retail, or industrial work spaces? And what new requirements might we expect commercial spaces will need to adhere to in order to ensure a safe work environment for their employees?

To lend some expertise on this topic, Omni Realty Group turned to John Gunning, who is the Senior Mechanical Engineer at McClure Company, based in Harrisburg, PA. Working within the Engineered Services division, he is responsible for the design of building mechanical systems for the commercial, educational and industrial markets. He is a licensed Professional Engineer in Pennsylvania and a LEED Green Associate. John is McClure Company’s in-house expert on the subject of ventilation and dehumidification and is frequently asked to speak at both technical and non-technical seminars regarding these subjects.

We asked John a series of questions related to how office, retail, and industrial spaces may need to adjust the functionality of their air filtration and sanitization in light of COVID-19. Keep reading to learn what he predicts to be the “new normal” of commercial HVAC requirements in Pennsylvania and beyond.

Omni: Prior to COVID-19, what was considered the standard level of air filtration in most office spaces?

JG: Pre-COVID we would expect to see 1-2” thick filters with a MERV 6 to MERV 8 rating. However, some systems may use lesser rated 1” filters, MERV 4 or less, with mesh or washable media.

Omni: As people return back to physical office spaces after stay-at-home orders are lifted, what changes do you anticipate businesses making to their office spaces to be more sanitary for their workers, particularly as it relates to HVAC and air-filtration considerations?

JG: With much of the discussion of the transmission of COVID revolving around the virus in aerosol form, we can anticipate businesses thinking of their HVAC system as more than just a tool to keep the space at the correct temperature. Building codes require outside ventilation air to be introduced into the building to dilute contaminants. Over time, outside air dampers may have been closed for reduced energy usage or for service and there may not be sufficient ventilation air being provided to the building. The American Society of Heating, Refrigeration and Air Conditioning Engineers (ASHRAE) has also issued this position document which includes recommendations for building owners. Among the recommendations are upgrades to a minimum MERV 13 filter and use of ultraviolet (UV) lights in the airstream. Previous studies have also shown that optimal humidity range for human health and reduced infection rates of seasonal Influenza and other viruses is 40-60% relative humidity.

Omni: What are the options available for a higher standard of air-filtration in commercial spaces?

JG: Most commercial HVAC equipment will except a 2” filter. A 2” filter can be manufactured with an efficiency rating up to MERV 13. However, there is a trade-off in both cost and in energy usage as the more efficient filter will have a higher air pressure drop. This higher pressure drop requires greater fan horsepower to move the same amount of air through the filter as compared to a lower efficiency filter.

Omni: In your opinion, what industries most need to make such improvements to air-filtration?

JG: At present, healthcare facilities and some manufacturing businesses are the industries whose filter requirements must meet or exceed the latest ASHRAE recommendations related to preventing the dissemination of airborne pathogens. Office, Retail, Education and Hospitality business are candidates for filtration upgrades as more people return to utilizing these spaces.

Omni: In addition to HVAC and air-filtration changes, what other improvements might you suggest to business owners to increase the cleanliness of their air quality?

JG: Active dehumidification is strongly recommended in order to keep the space’s relative humidity below 60 %. Limiting cooling season humidity can also reduce the risk of mold growth which can be a source of respiratory issues. On the other end of the spectrum, maintaining humidity levels above 40% is of equal importance. To that end, we expect more owners to consider the use of humidification in the heating season. Incorporating UV lights, in the supply air stream, is documented by ASHRAE as an effective method to deactivate genetic building blocks of viruses. While newer, bi-polar ionization shows potential as a technology capable of deactivating airborne viruses, it has yet to be recommended by ASHRAE. When outdoor conditions permit, increasing the use of outdoor air to dilute indoor contaminants is beneficial.

Omni Realty Group thanks John Gunning for sharing this valuable information and helping us to better understand the changes that may need to take place to improve air filtration and sanitization in commercial spaces as the result of COVID-19. During this unprecedented era in all of our lives –and the history of the world – it’s so important to arm yourself with knowledge and options that exist to continue to improve the health and safety of our communities where we live, work, and play. John’s insight and explanation of enhanced HVAC filtration requirements for commercial spaces should be helpful to all Central Pennsylvania businesses who are looking for additional health measures they can put in place for the safety of their workers.

Do you work in a commercial space – office, retail, or industrial? How do you feel like impact of COVID-19 will require changes be made to the air filtration and sanitization in your space? We welcome you to share your questions or reflections in the comment section below.

[Online Resources] Real Estate, air conditioning, air filtration, air sanitization, central pa, changes, Commercial Real Estate, commercial real estate market, cooling, coronavirus, COVID, COVID-19, COVID19, energy, enhancements, guest blog, harrisburg, heating, HVAC, industrial, mcclure company, Mike Kushner, office, Omni Realty Group, pennsylvania, Q&A, real estate market, retail, shayne homan, solar, space, trends
  • 1
  • 2

Subscribe To Our Blog

  • This field is for validation purposes and should be left unchanged.

Mike J Kushner, CCIM

  • Contact me for a FREE Lease Review!
  • This field is for validation purposes and should be left unchanged.

Categories

  • About Us
  • Blog
  • CCIM
  • Commercial Real Estate
  • Community
  • Construction
  • CPBJ Articles
  • CREDC Articles
  • Feature
  • Featured Opportunities
  • Guest Blogger
  • Healthcare
  • In the News
  • Industrial
  • Local Market
  • Office Leasing
  • Retail
  • Success Stories
  • Tenant Representative/Buyer Agent
  • Trends

(c) 2019 OMNI REALTY GROUP- Website Design by The John Webster Company