U.S. Department of Labor Secretary Martin Walsh discussed back-to-the-workplace and labor market issues with Real Estate Roundtable members today during a virtual town hall. Participants also included Roundtable Chair John Fish (Chairman and CEO, Suffolk); Fred Seigel (President and CEO, Beacon Capital Partners); Owen Thomas (CEO, Boston Properties); and Roundtable President and CEO Jeffrey DeBoer. (Watch video discussion) 

Pandemic Labor Market 

• Fish, below left, opened the discussion by noting how the pandemic has changed the relationship of employees to their physical workplaces, which poses new challenges for real estate. He cited a recent Pew Research report showing that the majority of teleworkers feel more productive at the office, yet appreciate how a hybrid work model improves their work-life balance.
  
  
• Secretary Walsh, below right, commented on how the overall labor market has bounced back from the COVID-19 downturn more swiftly than in prior recessions – and that the nation is continuing a “worker-centered” economic recovery.

• “Worker-centric means making sure workers have what they need to be successful,” Secretary Walsh stated, emphasizing how the Biden administration is working to create pathways for workforce development, job training, and apprenticeships. “But we can’t do it if we don’t have businesses at the table with us,” he continued. (Watch the video discussion) 
  
  
• The Labor Department’s February employment data analysis showed widespread job growth across the private sector – especially for hard-hit leisure and hospitality businesses.
  
  
• The jobs report also showed the overall number of telecommuting workers dropped to 13% in February, compared to a pandemic-era high of 24.3% in August 2020. (Bureau of Labor Statistics and Business Insider, March 4)
  
  
• Walsh also commented the employment report indicates that, “With the Administration’s Bipartisan Infrastructure Law beginning to invest in communities across the country, we have the opportunity to create many more good jobs and make sure that they are accessible to all workers.” (DOL Feb. Jobs Report) 

Workplace Return & CRE 

• During the town hall discussion, Seigel, above right, shared an overview of research underway by the University of California, Berkeley, with The Roundtable's DeBoer, above left.  Preliminary findings show that further delays of employees’ return to the workplace pose major risks to local government budgets and the health of cities – particularly for lost municipal revenues from transit services and from property, sales, and hotel-stay taxes.
  
  
• Seigel stated that the repercussions of the pandemic could reduce near-term revenue for certain municipalities between 10 to 18 percent per year.
  
  
• He added that property owners “… need to create environments that address employees’ health and wellness concerns.” Seigel noted how state-of-the-art building systems can share health-related data in real time with tenants. “The transparency and trust between tenants and landlords has never been more important than it is today,” he said.

• Thomas, above right, said, “You have to think about the office not as an obligation, but as a destination.” He added that property owners, tenants and local policy makers should consider various efforts to attract employees back to the workplace, including  “… amenities, indoor air quality, sustainability features, the environment around the building and proximity to transit.”
  
  
• “The future is some form of hybrid work, which is the reality of the market right now,” Thomas commented. He also stated that “Our leasing activity is at pre-pandemic levels, so clearly businesses are planning on using offices in the future but perhaps in a different way.”
  
  
• Return-to-office issues were also recently addressed on CNBC’s Squawkbox on March 10 by Roundtable Chair Emeritus (2015-2018) Bill Rudin (Co-Chairman and Chief Executive Officer, Rudin Management Company. Squawkbox  hosted Roundtable Member Scott Rechler (CEO, RXR Realty) to discuss the CRE market on March 17. 

Biden Administration Announces “Clean Air In Buildings” Challenge 

• In related news, the White House and the U.S. Environmental Protection Agency (EPA) yesterday released a “best practices” guide to improve indoor air quality and reduce the spread of COVID-19 inside buildings. (White House Fact Sheet; EPA Guidance)
  
  
• The “Clean Air in Buildings Challenge” is styled as a “call to action” that encourages building owners and managers to take steps such as: 
  • Create a clean indoor air “action plan” (e.g., regular HVAC inspections and maintenance)
  • Optimize fresh air ventilation (e.g., use economizers, open operable windows)
  • Enhance air filtration (e.g., install MERV-13 filters)
  • Communicate IAQ practices with building occupants 

Reopening businesses and the country is an important priority in The Roundtable's 2022 Policy Agenda: “Connection, Commitment, and Collaboration - Supporting Federal Policy Through Experience and Innovation in 2022,” sent this week to Roundtable members. 

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The Real Estate Roundtable will hold a virtual “town hall” on Friday, March 25 with Lieutenant Colonel (USA, Ret.) Alexander Vindman, former National Security Council Director for Eastern Europe during the Trump Administration, to discuss Russia’s war against Ukraine. 

Ukraine Support 

• The Roundtable’s town hall with Vindman will address Ukrainian President Volodymyr Zelensky’s speech to Congress on Wednesday and the U.S. response thus far to the brutal Russian invasion. Zelensky’s appeal galvanized the Biden administration to release additional aid to Ukraine. (President Biden video, transcript and Axios, March 16)
  
  
• Roundtable President and CEO Jeffrey DeBoer stated, “The Roundtable fully supports the billions in federal aid to Ukraine as its citizens continue to bravely stand up against Russian aggression. As we bear witness to the tragic violence of the invasion, The Roundtable encourages its members and all industry stakeholders to contribute to charities involved in Ukrainian humanitarian relief,” DeBoer added. (VetVoice Foundation)

• The Ukrainian war has compelled hundreds of American companies with business in Russia to either withdraw completely, suspend or scale back operations, or delay investments, according to the Yale’s Chief Executive Leadership Institute.
  
  
• Hilton President and Chief Executive Officer Christopher Nassetta (Roundtable Chairman 2006-2009) announced on March 9 the company’s actions in response to the crisis in Ukraine, including:
  
  • Closure of Hilton’s corporate office in Moscow;  
  • Suspension all new development activity in Russia;  
  • Donation of any Hilton profits from business operations in Russia to the humanitarian relief efforts for Ukraine, and;  
  • Donation of up to 1 million room nights to support Ukrainian refugees and humanitarian relief efforts across Europe, in partnership with American Express, #HospitalityHelps.
    
    
• Marriott International also recently announced the closure of their corporate office in Moscow, along with a suspension in opening upcoming hotels and all future hotel development and investment in Russia. (Marriott statement, March 10) 

Reviving Climate Negotiations 

• Separately, House Democrats this week urged the White House to revive negotiations on climate measures that were part of the moribund Build Back Better (BBB) Act. (Business Insider, March 8)
  
  
• A group of 89 House Democrats on March 14 wrote to President Biden stating, “The more than $555 billion in climate investments in the House-passed Build Back Better Act can serve as the building block to restart negotiations."  (House Democrats’ letter)
  
  
• The Roundtable sent a letter to Congressional tax writers last fall detailing recommendations to improve the BBB Act’s green energy tax provisions. (Roundtable letter, Nov. 16) 

The BBB bill passed the House in November, but stalled in the Senate amid disagreements with key Democratic Senators Joe Manchin (WV) and Kyrsten Sinema (AZ). (Roundtable Weekly, Nov. 19, 2021 and Jan. 21, 2022). It remains uncertain if any revised deal will garner their support. (CNBC, March15) 

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• SEC Chair Gary Gensler, above, said, "Today, cybersecurity is an emerging risk with which public issuers increasingly must contend. I am pleased to support this proposal because, if adopted, it would strengthen investors’ ability to evaluate public companies' cybersecurity practices and incident reporting." (Bloomberg, March 9)
• An SEC spokesperson noted that the crisis in Ukraine gave these proposals “special relevance.” (CNBC, March 9 and see story below on The Roundtable’s upcoming March 25 discussion on the Ukraine conflict)
• The proposed SEC amendments would include requirements around reporting material cybersecurity incidents – and providing periodic updates for previously reported cybersecurity incidents. (Wall Street Journal, March 9)
• The proposal also would require periodic reporting related to:
  • a registrant’s policies and procedures to identify and manage cybersecurity risks;
  • the registrant’s board of directors' oversight of cybersecurity risk; and
  • management’s role and expertise in assessing and managing cybersecurity risk and implementing cybersecurity policies and procedures.

• The Real Estate Roundtable is planning to provide comments on the SEC proposal in advance of the May 9, 2022 submission deadline and looks forward to Roundtable members’ input. The proposed four-day reporting timeframe for companies to provide cyber disclosures may not provide enough time for companies to discover the full extent of an incident. (BGov, March 11)

• An Audit Analytics report  released last year showed the number of cybersecurity intrusions reported by public companies increased from 28 breaches in 2011 to 117 in 2020.
• The average cost of a corporate data breach was $4.24 million in 2021, according to an annual IBM Security report.

• Separately, the $1.5 trillion omnibus bill spending bill enacted on March 11 included the Cyber Incident Reporting for Critical Infrastructure Act. The legislation establishes a narrower 72-hour window for critical infrastructure owners and operators to disclose a cyberattack to the Cybersecurity and Infrastructure Security Agency (CISA). Certain businesses are also required to report any ransom payments to the federal government within 24 hours, among other changes. (Brownstein Hyatt Farber Schreck, March 14)

• The Real Estate Roundtable’s Homeland Security Task Force (HSTF) is coordinating briefings on the following security threats through the Real Estate Information Sharing and Analysis Center (RE-ISAC):
  • April: DHS Sector Outreach and Programs (Active Shooter, and other soft target resources for the Commercial Facilities Sector)
  • May: DHS Fusion Center overview
  • June: US Secret Service cybercrime
  • August: The Protective Security Advisor Program
  • September: FBI cybersecurity/cybercrimeNovember: The InfraGard program