There's no doubt that the current pandemic has put a spotlight on work from home (WFH) policies and the necessity of sitting inside an office from 9 to 5. Technology and high-speed internet have enabled a new work reality that was thrust on us by COVID-19 but had already been slowly rearing its head.
Working from home will be the new normal for many in America, whether they like it or not. New data from both Redfin (NASDAQ: RDFN) and Zillow (NASDAQ: Z) (NASDAQ: ZG) give us some insights into how real estate investors should be thinking about the physical spaces they rent out and the markets they choose to invest in.
What the data says
Redfin research released last week shows that 1 in 4 newly remote workers are expecting to continue to work remotely as the pandemic subsides. About 40% of respondents noted that they were not working remotely prior to the pandemic shutdowns but were now able and allowed to work remotely.
Even more interesting is that over half of survey respondents said that if they could continue working remotely, they would move. If this trend continues, it represents a seismic shift in the fabric of American households. For real estate investors, this poses many risks and opportunities, including an exodus from major urban centers.
Redfin CEO Glenn Kelman said in the report, "Prior to this pandemic, the housing affordability crisis was already driving people from large cities to small. Now, more permissive policies around remote work, and a rising wariness about close quarters, will likely accelerate that trend."
Additional data from Redfin competitor Zillow sheds even more light on this demographic shift. According to their survey, 75% of Americans who are currently working from home due to COVID-19 say they want to continue doing so, with 66% saying they would also move if granted the ability to work from home long-term.
The bottom line
Now more than ever, investors should be more mindful of the physical spaces they rent out and which markets they invest in. Will it be much more important to have dedicated office spaces that are distinguishable from bedrooms? As they spend more time at home working, will tenants want better outdoor spaces, technology additions like high-speed routers, or even home gyms?
Will households that had two or three cars now require fewer and therefore need less parking? These are all critical questions investors should be asking themselves as they acquire new assets into their rental portfolio.