The pandemic caused 88% of companies throughout the world to shift to a remote-work model. The work-from-home life might have taken some getting used to at the beginning, but according to online real estate agent referral service Clever and its Real Estate 2020 Home and Office Survey, 63% of employees now prefer it, and 30% plan to stay working at home even after the pandemic.
The pandemic's effect on office space
While it was good news that so many organizations were able to pivot to a virtual workforce, all that empty office space was very bad news for commercial real estate investors. Office space leases took a nosedive in 2020: In the third quarter of 2019, 57 million square feet of office space was leased, but just one year later, that number dropped by more than half to 26 million square feet. Commercial real estate is a pricey commodity, especially in big-business areas like California, Texas, and the Northeast -- but even those prices have been decreasing during the pandemic.
Unfortunately, this is not a temporary setback for commercial real estate: 53% of larger companies and firms are aiming to scale down their office space after the pandemic.
The payoff of working from home
While many will argue in-person collaboration is better for a company's mission, there's no denying that the work-from-home life is a huge boost for the bottom line. Dell (NYSE: DELL) is one company that has been touting a virtual office for years now, to the tune of $12 billion in savings each year.
About 72% of remote staff enjoy their home-office setup. Of those already back at the office, 52% prefer it, while 48% would like to go back to remote work -- a nearly even split.
Of those who are on Team Work from Home, here are some of the top reasons:
- 62% enjoy reclaiming the time spent on a commute.
- 61% prefer the flexibility of a home-office setup.
- 55% say they are saving money.
- 39% believe they're more productive in a virtual environment.
- 38% enjoy more time at home with their furry friends.
- 24% like the ability to live in/move to a different location from their office.
Returning to business as (un)usual
The perks of working from home are about much more than just being able to sleep later in the morning (although 43% of home staffers cite that as a good reason). It's about how to keep safe post-pandemic. The Clever report found that about 56% of employees say they don't believe their organizations are doing enough to keep them healthy and safe back at the office; only 24% say they feel safe at the office.
Things to consider in residential and commercial real estate
For commercial real estate investors, it's all about making employees feel secure in returning to the office post-pandemic. Office-space configurations should permit for social distancing, while buildings should have air-ventilation systems that provide healthy recycling of indoor air.
It will be an adjustment to return to the office, even for those who are looking forward to seeing colleagues in person again. But when that day happens, it might not be the same office location. As companies downsize their space, office-space investors have a better chance of attracting new lessees if their buildings offer these top amenities that employees desire, as reported by Clever:
- Coffee and lunch places on-site/nearby.
- A parking lot/garage.
- Security staff.
- On-site day care.
- Eco-friendly buildings.
- Outdoor space.
- Pet-friendly offices.
- Close to public transit.
- Communal space.
- Nearby shopping.
- Things to do after work.
From a residential real estate standpoint, investors should build or renovate properties with an eye toward remote work. Rental landlords especially can woo work-from-home tenants with amenities such as high-speed internet access to stay connected and on-site gyms so they can take advantage of their lunch breaks. Also, given the increased number of pet adoptions during the pandemic, landlords would be wise to welcome furry friends to the community by way of dog runs and even a dog spa on-site.
The bottom line
The pandemic shuttered many businesses, but of those that could pivot to a virtual office mode, many were able to thrive. Office life might have its perks for employees, but unless those perks come with an assurance of safe surroundings post-pandemic, there are many that would opt to log on to staff meetings from the comfort of their own homes.