Doing business post-pandemic

By Joe Murchison

Most Laurel businesses have survived these past two and a half years, but the pandemic may leave a lasting impact on the way they operate in the future — mostly by accelerating changes that were already taking place.

For many, the pandemic has propelled a shift to hybrid schedules, with workers coming into the office some days and working from home on others.

For retailers, the pandemic has quickened the need to have multiple sales streams — in-store, online and by delivery. 

Rich McCoy, executive vice president of Konterra Realty, leases both retail and office space in the Laurel area. Properties include the Konterra Building on Sweitzer Lane and multiple buildings in the Konterra Business Campus off Route 1 south of Muirkirk Road.

McCoy said that flexible office-home work schedules were in their infancy before spring 2020.Today, the practice is “significant and much larger than pre-pandemic,” he observed. “Remote work is here to stay. We’re not going to reverse that. We’re not going back to mid-pandemic, where everyone was home. The hybrid work model is going to be the most common.”

McCoy said one of his tenants, a bank, had leased both executive office and training spaces before 2020. The bank has decided to retain the office space but to give up the training space. During the pandemic, the bank’s employees began to meet virtually, which worked well for them.

 “The days of 20 people coming to a conference room for a meeting” are in decline, McCoy noted.

Marilyn Johnson, owner of a sewing design studio and president of The Laurel Board of Trade, agrees that meeting expectations have changed. The organization is currently holding virtual networking events, not just for safety’s sake but also for convenience. 

“We don’t have to spend 20 minutes to an hour getting there and 20 minutes to an hour getting back. Pretty soon you’ve used up your whole day,” she said.

But Johnson said people still desire the immediacy of meeting in person, at least occasionally. She noted that many of the business organizations with which she is involved “will Zoom for two meetings in a row and then have an in-person meeting.”  

McCoy said employers know that spending time in an office with co-workers is important.

 “There is a benefit in going to a central place where there is a flow of ideas,” he said. ”Part-office/part-home work situations will probably lessen demand for office space, but I don’t think it will be a gigantic impact.” 

McCoy suggested that employers are still trying to figure out whether they can save space by having employees share desks with co-workers who come in on different days. 

“There are a lot of employees who don’t want to share,” he noted.

Ben Berman is optimistic about office leasing in Laurel for the same reasons as McCoy. Berman’s company, Berman Enterprises, owns four local office properties, including a mid-rise building at 312 Marshall Avenue, where Prince George’s Community College leases space  ; an office park off Sandy Spring Road, behind the Laurel Municipal Center; and two five-story buildings on Greenview Drive, off Route 197. 

“Leasing in 2020 [the first year of the pandemic] was basically non-existent,” Berman said. “We definitely lost a handful of tenants.” But he added, “We have seen a real resurgence of interest in our spaces in the Route 1 Corridor. … We’ve been pleasantly surprised by leasing activity from 2021 into this year.”

 Berman agreed with McCoy that businesses still desire a creative proximity in which “if you have an idea, you can pop into your co-worker’s office.”

Berman noted that most of his tenants are small-business owners who appreciate having some geographical separation between their work and their home life and that they also may need a professional setting in which to greet clients or customers.

Berman said that the wrenching first year of the pandemic did not deter his company from making a major bet on the viability of office space. The family purchased the two Greenview Drive office buildings, totaling 150,000 square feet of space, in the final days of 2020. They chose to do that, he said, because they could pay a low price — the properties had been in receivership for years and were up for auction. 

According to Berman, buying distressed properties and turning them around has always been the company’s modus operandi. He noted, too, that the family could convert the buildings to apartments if necessary. In fact, the demand for office space pleasantly surprised them. Starting with only 11% occupancy in both buildings in 2021, one building is now 88% leased, 18 months later, he said. Berman’s biggest tenant is Perfect Office Solutions, a company that has leased two floors and has divided them into modest offices for small-business clients. Berman Enterprises began marketing leases in the second building two months ago.

As for retail, Berman owns two adjoining shopping centers at the southeast corner of the intersection of routes 1 and 198. Those shopping centers have traditionally been fully occupied. During the first year of the pandemic, they lost several tenants, but “the vacancies got backfilled fairly quickly,” he said. The Megamart grocery is one the largest tenants.

Berman reported that most of their tenant businesses survived the pandemic because they “made appropriate pivots.” The businesses strengthened their online sales technologies and offered curbside pickup as well as home deliveries, he said. Such diversification has “helped the businesses not only survive, but also thrive post-COVID[-19]. … They are probably in a stronger position financially than they were before the pandemic,” he added. 

Konterra’s McCoy agreed that the pandemic quickened the decades-long shift to online commerce but said that it also exposed limitations. 

“Online isn’t going to totally take the place of bricks and mortar,” he said. “People still want to go to a store and try on a pair of shoes, rather than ordering 10 pairs and sending nine back.” 

McCoy said he had heard from brokers of high-quality retail space that they have two to three businesses vying for every vacancy. 

“The [retail] world isn’t as bleak as it looked a couple of years ago,” McCoy said.

Laurel Mayor Craig Moe said he was relieved the city survived the pandemic without suffering a rash of empty storefronts and office spaces. 

“There have been a few, but not many businesses in the city that have closed,” he said.

Moe noted that federal aid during the COVID-19 pandemic, including the CARES Act and the Paycheck Protection Program, has been crucial in keeping the city government and business community healthy.

Throughout Moe’s 20-year tenure as mayor, he has focused on how to preserve brick-and-mortar businesses in a world that increasingly relies on online commerce. City grant programs to help merchants on Main Street and in other targeted areas with move-in expenses and façade renovations have helped, he said, and the city is considering expanding such programs.

Moe noted that many of his colleagues in the state are also concerned about their Main Streets’ futures: “It’s something we always worried about. … The pandemic has really heightened the alert.”