The coronavirus pandemic has changed the way a lot of companies operate. For almost the past year and a half, many employers have had their staff working remotely due to COVID-related safety concerns. But the experience has been a mixed bag. While some employees have enjoyed remote work and thrived, others have found themselves teetering on the edge of burnout. This applies especially to people who struggled to attain a decent work-life balance when their living rooms suddenly double as their offices.
The new practice has gotten a lot of companies to rethink the workweek. Some are now toying with the idea of getting rid of the classic five-day schedule and replacing it with a four-day workweek instead.
Crowdfunding platform Kickstarter, for example, has said that it will implement a four-day workweek beginning in 2022. And consumer goods company Unilever announced last year that it would be experimenting with a four-day workweek among its New Zealand employees through December 2021. If things go well, that setup could be extended to U.S. employees.
These are just a few examples, but as work arrangements continue to evolve in the age of a pandemic, more companies may start to contemplate the idea of a shorter week, especially if technology makes it possible for workers to maintain their productivity even while putting in less time at their desks. And if the four-day workweek does gain traction, it could have a big impact on real estate investors.
A decline in office space demand?
The whole purpose of instituting a four-day workweek is to give employees more flexibility and help them avoid scenarios where their jobs negatively affect their mental health. And part of that flexibility could involve letting workers do their jobs remotely on a long-term basis, or on a hybrid basis, where they come to the office a few days a week but finish their work from home the rest of the week.
All of this may be a good thing for workers, but it could be harmful to office REITs, or real estate investment trusts. If companies increasingly move toward more flexible models, they may, in turn, seek to unload office space as workers split their time and share desks and resources. The result is that leasing activity at office buildings could remain quite sluggish in the wake of the pandemic, and given the hit office REITs have taken over the past 18 months, that's not a good thing at all.
Of course, the four-day workweek is still far from becoming the norm. Right now, some companies may be curious about it, but in the near term, the five-day workweek is likely to hold strong.
Still, office building investors will need to gear up for the fact that companies are rethinking what it means to work on a full-time basis. And office landlords may, in the coming years, need to prepare to get a lot more flexible as employers explore different arrangements that benefit not only their staff, but also their bottom line.