REI Is Selling Its Brand New Massive Custom-Made HQ Building That Was Slated To Open This Summer
Sat, 08/15/2020 – 15:25
In what is just one example in a sea of examples of how Covid is negatively affecting commercial real estate, outdoor recreation retailer REI is looking to sell a custom made headquarters campus that was set to open this summer.
REI was looking to open the campus this summer after custom building the headquarters as a way to try and recruit new employees, the Wall Street Journal reported. The property includes outdoor staircases, a courtyard of native plants and numerous skylights – all of which play into the company’s image as a retailer focused on the outdoors. The building had taken 2 years to make.
Those plans were stopped in their tracks due to the pandemic and the retailer is now scrambling to find a buyer for the property. REI instead plans to open numerous smaller offices and allow its employees to work from home, which they have been doing since March.
REI’s attitude change is similar to that of many other companies who, surprised by how productive employees could be from home, have shifted their businesses to a work-from-home model. Many companies say they will continue the model after the pandemic. As a result, many companies are looking to ditch expensive leases and commercial real estate properties.
Money is also a concern for the company. The company hopes, like many others during the pandemic, to raise cash from selling its headquarters that it can turn around and invest in other parts of the business.
REI CEO Eric Artz said: “The dramatic events of 2020 have challenged us to re-examine and rethink every aspect of our business and many of the assumptions of the past. That includes where and how we work.”
Jamie Hodari, CEO of co-working company Industrious, said companies around the nation are making similar shifts as REI. He expects similar announcements from many companies over the next year: “This is going to be a thing you will hear from hundreds of Fortune 500 companies.”
The weak commercial real estate market may hurt the price the company gets from the sale, but may act as a tailwind for going out and buying new, smaller commercial real estate. REI’s chief customer officer, Ben Steele, told the WSJ that the company will move to smaller offices closer to its employees:
When the company began building its headquarters in 2018, the thought was that “for us to be able to collaborate effectively, we need to be in a single location,” Mr. Steele said. But over the past couple of months, Mr. Steele said, the company learned that collaboration works fine even if everyone is in their living rooms.
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