The Covid-19 pandemic wreaked havoc on the U.S. and global economy, resulting in the steepest—and perhaps quickest—recession in history. As we write, the United States is by no means out-of-the-woods and many challenges still lie ahead. For the business and real estate community, however, many of these challenges are already here. The way we work, build, and do business are all poised for major changes. Now is the time for business leaders and developers to rethink, adapt, and evolve.
With respect to Capital Hall Partners’ current Qualified Opportunity Zone (QOZ) projects, we find ourselves in the very fortunate position of being able to adapt quickly to the new normal. Some of the critical ‘future-of-business’ trends currently underway play into our favor, serving as tailwinds—not headwinds—to the direction we are headed.
Two prime examples are in the Greater Boston Area, where we are developing the Gateway Innovation Center and Brickyard @ Assembly projects. There is serendipity in the fact that we are developing two Life Science campuses right now, given the profound spotlight currently shining on the Biotechnology and Life Science sectors. But the reality for us is that we saw major potential in the sector well before the first cases of Covid-19 appeared in the world, and we view the Greater Boston Area as the mecca for work in this critical field. As demand for scientific research and development rises in the wake of the pandemic, we believe this market will experience more job growth, more wage growth, and higher demand for housing, office, laboratory, and data center space.
We are currently working with designers and furniture manufacturers to configure the work areas to provide maximum densities without sacrificing separation. The openness of the building space allows us to develop a plan that prioritizes physical distancing. The HUB can be planned to address Desk Settings, Bench Settings, Collaborative Settings, Individual Work-Point Settings, and Neighborhoods without sacrificing employee density. Future flex spaces are designed to be converted, enhancing collaboration in a safe way. There is no need to install plexiglass dividers to address separation as the HUB will design and configure movable whiteboard spaces that are functional and amendable.
With sanitizing and cleanliness two of the top priorities for individuals returning to work, we will encourage our tenants to plan, communicate, and enforce cleaning regimens to support services and employees. The HUB will incorporate touchless technology into future tenant improvements. This technology will include ingress/egress doors, doors into restrooms and other common areas, plumbing fixtures (sink faucets, toilets, urinals, and towel dispensers), and lighting and mechanical system controls. We are currently exploring the viability of nano-coatings that are anti-microbial, anti-viral, and anti-fungal. These coatings claim to reduce surface contamination and are self-cleaning.
The ability to work and meet outdoors is a hallmark of the HUB, which features a covered 14,000-square foot outdoor workspace. Early research indicates the risk of community transmission outdoors is relatively low, particularly if physical distancing is being maintained.
The HUB’s outdoor workspace will be landscaped to create additional shade and a comfortable environment, providing tenants the ability to use this area for outdoor conferencing, teamwork, and collaboration. The area is overlaid by photovoltaic panels that will generate electricity for the building and sell the balance back to the grid.
An unfortunate reality of the current moment is that most, if not all, office buildings will need to provide ‘isolation’ rooms for employees exhibiting symptoms or feeling ill. The HUB can accommodate these feature rooms equipped with materials conducive to disinfectant cleaning, as well as having special ventilation and/or negative air pressure to further reduce exposure to others in the area. Since the HUB is designed to accommodate individual packaged HVAC units, the ventilation can be planned for this specific use rather than an expensive adaptation.
According to the Centers for Disease Control, many viruses—including the novel coronavirus—tend to spread rapidly indoors through close personal contact, but also via circulation from building ventilation systems.
The design and engineering of HUB’s mechanical system will become important in establishing and maintaining a healthy building. One way to dilute airborne contaminants is to increase air exchanges and increase filtration. The HUB’s plan provides for several locations and sizes of individual package HVAC units, allowing for an increase in the fresh air intake. This feature, combined with the large roll-up doors, will help achieve this goal. The HVAC system is designed and engineered to incorporate a high level of filtration such as high MERV or HEPA filters.
The HUB is also designed with limited entry points. This layout was originally planned for safety and security, but can now be used to set up a thermal scanner before an employee enters the workspace. While the thermal scanner won’t be able to detect Covid-19, the non-contact scanner can detect fever-level body temperatures.
Finally, pandemic-related matters aside, the HUB has a distinct location advantage. Tempe is the strongest submarket in a Greater Phoenix market, which boasted record absorption of over 3 million square feet in Q3 2019, record construction numbers, and healthy pre-leasing activity. Since 2010, Greater Phoenix vacancy has dropped 40 percent, and the outlook for 2020 and beyond remains strong based on a large influx of companies moving into the market. Tempe maintains a vacancy rate of 4.9 percent, significantly ahead of the second lowest submarket (the Southeast Valley at 11.7 percent). Tempe also posted the largest asking rate increase quarter over quarter, according to a CBRE Q1 2020 report.
The HUB is in the center of five major freeways, one mile south of Arizona State University (named #1 in Innovation for five consecutive years), Tempe Town Lake, and the Mill Avenue Entertainment District. Four miles to the southeast is Sky Harbor International Airport, which ranked as America’s Second Friendliest Airport in 2019, the 44th busiest airport in the world, and 13th busiest in the United States. The confluence of these market and location strengths should benefit the HUB as the economy recovers.
The pandemic is reshaping business and society in many ways, but we would also argue that many of these changes were already well underway. Demand for data centers, multi-family housing, biotechnology breakthroughs, and environmentally sustainable, socially responsible, and physically responsive workspaces has been on the rise for some time. The pandemic is merely accelerating these trends.
The Capital Hall Partners’ approach fits neatly into this new normal. The pandemic has not forced us to alter our mission, and in fact has done just the opposite—it has confirmed we are on the right path, applying the right processes, and building in the right markets. The current environment is chock-full of opportunities and challenges, which in our view gives urgency of the need to rethink, adapt, and evolve.
For readers and investors who want to learn more about our projects in Qualified Opportunity Zones, the terms of investment, and/or who have questions about how Qualified Opportunity Zones work, please reach out to us at firstname.lastname@example.org. We’d be happy to talk with you.