Testing Is The Key To Reopening, And Real Estate Is Gearing Up To Play Its Part

New York is in the early stages of hatching a plan to involve real estate in rolling out more testing across the city, a crucial step for the country's largest economic engine to reopen. While the ambitious rollout may well face a slew of logistical challenges, real estate players are keen to play a role in reigniting the economy that is so crucial to their survival.

Gov. Andrew Cuomo announced in his State of the State address last month that the state is working with real estate players to open “pop-up” rapid testing sites where people can get tested before going inside businesses or socializing. Major operators like RXR Realty, Rudin Management and GFP Real Estate have already put their hands up to be part of the effort.

Others told Bisnow they are not eligible to offer space and aren't yet involved but want to participate. Meanwhile, multiple commercial property owners have committed to offering regular testing to their tenants, Cuomo said in his address.

A representative from the state declined to give additional details on the program this week. The Real Estate Board of New York didn't provide specifics beyond saying in a statement the organization and its members are working with officials to start offering free space in retail spaces and large commercial buildings, and that it is committed to “significantly expanding this effort” in the coming months.

In the year since the coronavirus pandemic upended global life as we know it, testing has become widely accepted by public health experts as one of the key parts of safely returning to normal life.

“We really need to get ahead of where the virus is spreading,” said Dr. Bruce Y. Lee, a professor at City University of New York Graduate School of Public Health and Health Policy. “So we really need to make it easier for people to get tested. For many, it’s a bit of effort or a chore … The ideal situation is rapid access. You have to have a lot of sites out there.”

Lee believes the way to end the virus is through public-private collaboration, like leveraging real estate space to roll out testing. But he cautions there is a spate of issues that need to be considered if businesses — in this case landlords — get involved in running testing.

“This is a public health issue, this is not an individual business issue. It’s one thing for employers and landlords to work with public officials and work with the government. It's another to take it into their own hands,” he said. “We still have problems with stigma and misunderstanding of what this virus is and what infections can mean ... There needs to be oversight for these things.”

He said there will need to be a lot of transparency and strong guidelines set out so the program, which could be critical in driving the city to safe reopening, runs appropriately.

For Anthony Capone, the president of Ambulnz and its subsidiary, Rapid Reliable Testing, real estate owners offering space will significantly drive down the cost of testing to the consumer, which will ultimately allow it to become a bigger part of daily life.

“Manhattan rent is so expensive, if you have to factor into every single test maybe for one storefront an extra $20K per month … let’s say that space there is doing 100 tests per day, and is working Monday to Friday, you are talking about adding at least a $1 per test from real estate costs,” he said. “That might not seem like a lot but you want this to be in the single digits or low double digits per tests in order for this to be widely accepted, if it’s more than that, then the usage will be specific to a certain socioeconomic status.”

His company developed tests in the height of the first wave of the virus in New York City to provide to the firm’s first responders. Now its testing clients include Miami-Dade County, the California prison system and real estate firm RXR.

[Commercial landlords would be] subsidizing testing for all of the general public … it’s an amazing opportunity to pair together an available supply with a critical demand," Capone said. "It’s a win-win.”

Still, he noted setting up a testing site is no small feat, with a myriad of certifications required and proper storage needed.

There will likely be many obstacles as real estate players offer space for testing and employers incorporate it into their operations, PwC Advisory Real Estate Director Katherine Huh said.

“It’s a little daunting for the landlords. If you test and someone comes back positive, you are responsible for what happens next,” she said of the concept of testing in office lobbies. “It is a clunky process right now, I have no doubt it could get more streamlined, but landlords aren’t set up for it at the moment.”

There are multiple examples of private industry forging ahead with its own testing in order to resume operations. Office landlords with vast footprints in New York City were quick to roll out testing with their employees. Related Cos. and Rudin say they run testing within their workforce, with Rudin now surveying its tenants to establish their interest in testing within their companies.

At RXR, employees are tested fortnightly, and the company is working with tenants to provide them with testing too. About 10 RXR tenants are looking into using the testing, RXR Senior Vice President David Garten said, as well as several non-RXR tenants and owners. 

“You can put a number of measures in place, in terms of screening for asymptomatic individuals," Garten said in an interview. "There is making sure people wear masks, there is changing the air quality and there is track and trace, but the key element though when it comes to getting workers back, and ensuring the environment is safe, is testing.

"Most tenants are working from home, but as they are starting to think through what the return to the office looks like, [testing] will be one of the key components,” he added.

If the state is working with real estate to execute on this plan, Huh said, there will need to be a lot of infrastructure put in place, and landlords may need significant help in making it a reality.

“I don’t think it's a bad idea, it works in the airports, they have been able to figure it out. It can’t slow the slow the flow of traffic and if you have someone who’s sick you need to have really rock solid processes around it,” she said. “It’s a very different way to lay out the space.”