A Happy Workplace: A True Driver of Employee Productivity

Did you know that workers who are in a happy mood are about 13 percent more productive? 

The employer/employee relationship is becoming more complex as it goes beyond basic benefits packages and companies look to take responsibility for supporting employees’ emotional stability. In fact, a 2021 study by Wellable reported that 88% of employers are investing in mental health programs. 81% of those companies are investing in stress management and resilience and 69% are investing in mindfulness and meditation. 

While it’s not a guarantee that providing one or most of the emotional stability programs will help move the needle for employee morale and happiness towards the company it is a good start; but also might be a band-aid solution for deeper rooted issues. To avoid “putting a plaster” on employee happiness the key is to truly know what makes your employees happy. 

What Makes A Happy Workplace? 

While many employers might say pay is at the top of what makes employees happy, it actually falls more towards the middle. A study conducted by Indeed.com of over 5 Million workers found that the drivers of happiness have slightly changed in the U.S. since the onset of COVID-19. The workplace happiness drivers are as follow: 

1. Feeling a sense of belonging

2. Having workplace flexibility 

3. Feeling respected in an inclusive environment 

4. Having a clear purpose 

5. Paid fairly 

6. Feeling Supported 

7. Trust colleagues 

8. Opportunities to learn 

The Happier Way Forward 

In addition to a more productive workforce, investing to make a happier workplace can create a competitive edge for companies. Happiness multiplies in nature and can spread across a company encouraging employees to more pride in their work. While we are not mental health specialists, we are workplace specialists that pride ourselves on your productivity per square foot ™ and we are here to help and advise you on your workplace needs every step of the way. 

When you head back into the office is your four-legged coworker coming with you?

In 2020 pet sales soared and animal shelters across the U.S. were nearly empty as people sheltered in place amid the coronavirus pandemic. Now, after spending a year with their “quarantine pets” remote employees and companies are looking at the possibility of returning to the office with their four-legged coworkers by their side. About 60% of executives are considering pet-friendly policies and 42% of executives believe that a progressive pet policy will coax employees back into the office. 

Reasons why companies are considering pro-pet policies 

•  Potentially get employees back into the office sooner 

• Attract top talent that are pet owners 

• Keep employees more active 

•   Increase productivity and  contentment among employees 

•  Expand creativity, resulting in less stress  and more exercise 

Of course with all “pro” lists there is also a “con” list. Pet-friendly offices will only work if the pets are friendly to the people and the other pets in the office. Pets in the office can also be distractions, messy, and noisy. Needless to say, companies that are considering a pet-friendly office should put together thorough guidelines for employees who bring along their four-legged coworkers. 

What do you mean I might not be able to bring my dog into the office? 

As companies look to expand their pet policies, they should also check to make sure their building is pet-friendly before giving their employees the green light to bring in four-legged coworkers. While there are many office buildings that are pet-friendly, most class A multi-tenant office spaces aren’t. 

What are landlords saying about pets in the office? 

What we have discovered with many office landlords in the Atlanta area, is that pets aren't so much allowed as they are tolerated. 

Jennifer Koontz the Managing Director of Leasing and Advisory Services at Pope & Land Real Estate oversees the leasing of over 1.7 million square feet of office space in the surrounding Atlanta area. Koontz stated that: "Typically we do not allow pets in the buildings, though we have one building that we have allowed small dogs with very strict guidelines.  (In this case, this was a major negotiation point that allowed us to sign the lease with a major tenant, at the height of the recession). However, I would not consider this a pet-friendly building since no one else is allowed to bring pets to the office. We have another building that we purchased and it previously allowed dogs, so we needed to adopt a “Don’t ask, Don’t tell policy, where we look the other way when people bring them in."  

Alexis Easterling, an Associate at JLL, represents about 2 million square feet of office space in the Atlanta area. Easterling stated that: “Most buildings I work on are not pet-friendly inside the building’s premises. However, I just recently started working with a flexible offering partner, WeWork, and most of their spaces are pet-friendly, pending that the building they are operating in allows for this use.

 I think pet policies are heavily weighted towards what image or user the Landlord is targeting for their asset(s). There’s a large difference in sophisticated, professional service users wanting an upscale feel versus start-ups that attract young, creative talent in a more relaxed environment.``

The Bottomline

Amid the mental health and burnout crisis companies are currently facing, making every day “bring your pet to work day” can improve morale, reduce stress, prompt creativity, and so much more. Implementing guidelines and receiving permission from your landlord is advised to mitigate any issues when expanding an office pet policy. 

If you’re in the market for pet-friendly office space, we would love to help you find the perfect place. Wildmor, is your business in the right PAWlace?

The Future of The 1031 Exchange Program and What That Means For Your Commercial Real Estate Investments

Unlike the stock market where many factors are out of your control (you can lose all your money overnight), investing in commercial real estate allows you to build wealth over time and offers many tax benefits. We have helped many clients with their building acquisitions and dispositions, all while guiding them on how they can optimize tax benefits that come along with their investment. While there are many tax benefits for investing in real estate, perhaps none of them are more valuable than the 1031 Exchange Program. 

Since President Joe Biden has announced that he plans on eliminating the 1031 Exchange Program for investors whose annual income exceeds $400,000, those that are seeking to make commercial real estate investments in the future will be largely affected. 

What is the 1031 Exchange Program: The 1031 Exchange Program allows you to defer your capital gain taxes when you swap one investment property for another. The IRS code section 1031 has many rules and limits that an investor needs to be aware of, but the 1031 Exchange Program has ultimately been considered a huge tax benefit for real estate investors as they grow their portfolios. 

Why it matters: If the 1031 Exchange Program is eliminated, capital gains tax will nearly double for investors that are in the top tax bracket (39.7%). Investors who are worried about the large tax hike will think twice before selling their properties and the supply on the market will shrink. In addition, there will be little incentive for investors to put their proceeds towards larger real estate investments. 

What we are advising: There is still a chance that the 1031 Exchange Program will not be eliminated, but if it is, you should be aware that real estate is an allowed investment inside retirement accounts and is an ideal option for tax deferment on real estate investments. Both IRA’s (Individual Retirement Accounts) and 401(k) plans allow any rental income to grow tax-deferred and can be re-invested. However, there are times when using a retirement account is not appropriate for making a real estate investment, and using cash will be more beneficial. 

Key takeaway: While the 1031 Exchange Program hasn’t been eliminated by President Joe Biden yet, it is important to know your options when looking to make an investment in commercial real estate. At Wildmor Advisors, we are not experts in tax law, but we are experts in commercial real estate and we are here to help answer any questions you have on any current or future investments you plan to make.

Migration to the Sunbelt States Brings More Real Estate Investors

In 2020 commercial real estate transaction volume dropped 64% year over year according to Real Capital Analytics. As we move further into 2021, real estate investors have seemingly set their sights on the Sunbelt States. The Sunbelt States check two important boxes for commercial property investors:

1. Job growth 

   In Milken Institute’s Best-Performing Cities 2020 Where America’s Job’s Are Created and Sustained, Sunbelt Cities make up 15 of the top 25 cities for job growth in 2020.

2. Increased population

   The Sunbelt region runs from the Southeast to the Southwest. It is made up of eighteen states and according to Moody’s Analytics, the population growth over the last ten years in the Sunbelt region accounts for 75% of the population growth in the country. Clarion Partners predicts that 55% of the US population will be in the Sunbelt region by 2030.

   The US postal service verified over 300,000 have fled the five boroughs in New York with the change of address requests outside the city. Cities will face huge deficits with these wage earners leaving as 75% of these people earn over $100k per year. These wage earners pay 80% of all taxes collected by these cities.

Job growth and Increased population are two huge factors when looking at investing in real estate. Investors are chasing higher yields or capitalization rates in growing markets like Charlotte, Raleigh, Greenville, Boise, Phoenix, Jacksonville, Dallas, etc. We are seeing annual returns in these secondary cities return 1%-4% increase over the cities with negative growth rates.

 In addition to job growth and increased population, politics is also playing a part in the Sunbelt States commercial real estate investment upswing. The Biden administration is considering eliminating the 1031 exchange concept from commercial real estate investment. The 1031 exchange tax laws allow an investor to put off gains and roll capital gains into another investment if done in a 120 day period after their sale. This threat of paying higher taxes has in turn created a flurry of property buying activity among real estate investors in cities like Atlanta, Phoenix, Dallas, and Houston. 

We expect the popularity of the Sunbelt will continue to flourish. As an Atlanta-based commercial real estate firm we are excited to see the job growth, population growth, and the flurry of commercial real estate buying.

3 Pandemic Influenced Trends In Commercial Real Estate

1. Workspace changes 

Based on the Center for Disease Control (CDC) recommendation to maintain a six foot social distance, many companies will be making changes to their office space before reopening. What are some things we are recommending our clients consider?

What is your daily maximum capacity? Rearranging your workspace may not be possible. Once you have determined which desks can be utilized and additional areas, like conference rooms, have been converted into additional desk space or left as is, what is the maximum number of employees that can safely occupy your office space?

What is the cost? Each company will have to decide how much to spend and where. The health and safety of employees is at the forefront. We advise our clients to ask their landlord what  protocols have been implemented for their safety and what ongoing initiatives are planned to continually promote health and wellness. 

Who’s the authority for oversight and accountability? Once you have reconfigured your office space to ensure your employees are safe, consider appointing a “Pandemic Officer”, ideally with decision-making authority, to answer questions, make sure office space continues to meet CDC guidelines and employees are considering the safety of others.

2. Increase in available subleases

At Wildmor Advisors, we are actively tracking the submarket subleasing fluctuations, as well as vacancy rate changes since March 16, 2020. The amount of available sublease office space on the Atlanta market has increased by 3.8% over the past 60 days. Our clients who are subleasing office space at this time are doing so as a cost recovery strategy. Besides cost savings, what are some other things to consider before deciding to sublease your space?

How much office space do you need? This is the million dollar question most of our clients are seeking an answer to. Many companies have reported employees being more productive and happy working from home. Can those companies realistically plan to part with the extra square footage or even forgo office space all together? Large companies that have announced their employees will be working from home for the foreseeable future, haven’t made any major real estate changes yet. As we see shifts in the commercial real estate market, we will continue to update our clients.

Sublease recovery? Now that we have seen a spike in sublease activity (39 new office space subleases totalling 2,244,879 square feet have been added to the Atlanta market in the past 60 days), our clients need to consider how their space compares with other available subleases and the recovery they can expect. Wildmor specializes in helping our clients strategically analyze the various scenarios associated with subleasing all or a portion of their office space.

3. Rise in demand for Industrial Space 

According to Adobe’s Digital Economy Index, e-commerce was up 49% in April, compared to the baseline in early March when the stay at home orders were not fully in place. As e-commerce ramps up, manufacturing and distribution companies are looking to expand their warehouse/industrial operations to keep up with demand. Atlanta has more than 400 million square feet of Industrial space and is the second leading city in the U.S. for this real estate class. What should you consider if you’re looking into acquiring additional industrial space?

Will the amount of available Industrial space on the market decrease? We believe that it likely will. The graph below is the availability rate of industrial spaces in the greater Atlanta area. We did see a brief spike in mid Q1, but are expecting to see the availability of industrial space trend downward in months to come.

How much leverage is there for negotiations? Due to basic economic supply and demand factors, tenant leverage could tighten in negotiations for a more limited supply of available industrial space. Overall, the asking rental rates per square foot for industrial space are expected to continue to increase through Q2 of 2020.