Thinking through full office occupancy post COVID 19

We are currently in midst of a big surge in COVID 19 infections. Today Mumbai saw its highest single day rise. This is a far cry from Feb when everyone was gung-ho about COVID 19 being under control. Given the situation, we have to make hard decisions about office occupancy. This is how I thought through this:

First, we don’t know where these nos will peak. Same time last year, we had seen the nos surge. Leading experts in epidemiology and stats had tried predicting the nos. Even the leading experts failed. It’s no different this time – the situation is changing very fast and no one understands the underlying causes. Hence, the COVID 19 infection nos can’t be predicted with any degree of reliability.

Second, the nature of infections is different this time. A high proportion of cases do not require hospitalization. But, we again don’t know how this will pan out.

Third, open vaccination is likely to start only around June/July. Assume that someone takes the first shot on July 1st and takes the second shot around Aug 15. So, the full effect of immunity will come only by end September. This timeline would advance to August if open vaccination starts earlier and if people give in to the urge of coming out.

Fourth, vaccines are not eliminating the risk of infection. Many infections have happened after the shots. The leading theory is that vaccines are making it easier for our bodies to fight back leading to milder symptoms.

Fifth, work must go on. Some work can be done remotely and some work has to be in-situ. In between these two ends lies an an entire continuum. Thus, we need to choose on the basis of role, exigencies and individual preferences. This means that some office capacity has to be flex capacity to allow usage as per needs of the time and the team.

Putting it all together for a office capacity decision, only points 3 and 5 matter:

1. Full capacity is not needed before September/October.
2. Some flex capacity is needed for 6 months. This needs to be assessed. In our case its approx 20% of full capacity.

Two takeaways:

1. Commercial real estate industry would continue to see dampened activity and downward pressure on prices for another 6 month
2. We need to decide on the basis of what we can predict and predict with reasonable certainty. This may mean ignoring a lot of data like daily COVID infection nos which have lot of uncertainty. High uncertainty means low predictability. At best, we can take away the general direction.