How Working from Home Changes the Landscape of Real Estate Investing
Undoubtedly, the current pandemic has put a spotlight on work from home (WFH) policies versus the conventional practice of sitting inside an office from 9 to 5. Technological advancement and high-speed internet have enabled a new work reality to stumble upon us by COVID-19 and now we are on the verge of yet another major turning point.
Working from home will be the new normal for many Americans, whether we like it or not. New realities unfold day after day giving 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.
COVID-19 has forced the issue of working from home to the forefront of many organization’s thinking, but it has simply triggered the hot-buttons in working behavior that has already been gaining pace and that the real estate sector must respond to.
It’s really shocking to realize that in just 90 days, things have changed dramatically. Just how much can three months do? Yet, in that short period, the way we think about where and how we live our lives, and how we do our work has completely changed.
In the latter part of those quarantined 90 days, many people admitted that the pandemic has forced their hands and has actually inspired investments in new technology or motivated a change in operations. These changes aggravated the pandemic’s huge impacts on society.
Real Estate IQ examines all the contributing factors to this new trend that could impact the real estate industry. Join us as we lay all the cards, the good and the bad, and anything in between that could reshape the landscape of the real estate investing business.
Paradigm Shift is real!
One of the big changes is the work-from-home policy. Employees would no longer be tied to centralized offices, instead of working wherever and whenever they needed to fit into their daily lives.
What started as a way to keep employees safe at home is now turning into the most popular work trend across the country, inspiring companies everywhere to step away from very large real estate construction projects and lease deals.
Massive global corporations across the country are either going completely or partially remote. The list starts with Twitter, which decided to go 100% remote. Other companies, like Mondelez, Nationwide, Facebook, and Barclays, are also considering a permanent shift to work from home.
We have been in COVID for three months, and because of these three months, we have gained the trust and familiarized routine for working at home. We can expect to see businesses letting more employees work remotely.
When office real estate is expensive and the country is facing an economic meltdown, and a work-from-home trend seemingly falls from the heavens, it would be illogical not to take it, right? Which, again, points to the soundness of organizations’ decision to run away from physical real estate.
The Good Side
A survey conducted by the research firm Gartner reported that 75% of respondents plan to increase the number of permanent remote employees.
First, if these changes save the company more money and if it means they can keep their job, then, it’s going to be a win-win situation. On top of that, the work-from-home world gives them flexibility, gets rid of the commuting hassle, and lands them more family and leisure time. Many employees now love work from home because they are finally reconnecting with their family, and even starting to look at life slightly in a different light. .
One benefit from dedicating to a completely remote workforce is that the talent pool would be much broader than what could be found within a certain geographic circumference around the office. When you hire remotely, you can get the best talent around and not just the best talent that wants to live in any given workplace. You get true diversity of human resources and it somewhat affects innovation.
Some corporations, like Facebook, are looking at this as an opportunity to adjust pay scales as well, another silver lining to the work-from-home situation for the companies. Observation results are shocking over the last 90 days. No decline in productivity was detected. Most found an increase in efficiency. Work-from-home is a technology-driven innovation that seems to offer benefits to both employees and executives. The former could eliminate the real hazards of commuting and work the hours that suited them best. Management would save on high-priced real estate and could hire applicants who lived far from the office, deepening the diversity of the talent pool.
Yes, this can be good for corporations, but what about the people who work for them? Surprisingly, the majority of workers are rejoicing.
A Hanley Wood flash survey showed that 60% of those working from home would like to continue to work from home. This recent Gallup poll also showed that nearly 60% of respondents said that they would like to keep working remotely after restrictions on businesses and schools have been lifted.
There are also social reasons to cheer for a more remote future. It might help reverse the geographic stratification of American life. Plus, remote work is showing a positive impact on the environment, since less commuting means fewer emissions of gases that aggravate air pollution.
Urban lovers are giving up the prize about the city lifestyle to save money. The Hanley Wood survey also asked if employees would consider moving to a new home if they were allowed a permanent remote work situation—more than 36% said yes.
That number shoots up to 55% when respondents were asked if they would move if they currently lived in an expensive market and could go all remote. The affordability of the market made a big swing in responses which is clearly evident from what Facebook CEO Mark Zuckerberg told the Wall Street Journal recently. He said that about 75% of his employees expressed some interest in moving to a different city if they could work remotely.
For the real estate sector and its investors, the next few years seem to be an exciting period, with their plans for adaptation to remote working potentially brought forward and becoming a reality.
But just like any other, a plan is always a two-way street. There will always be two sides to the story. In the second part of this blog, we will uncover the possible risks of the work-from-home setup and its relationship with the real estate industry.
Sources : https://www.hanleywood.com/ https://news.gallup.com/poll
Disclaimer: The blog articles are intended for educational and informational purposes only. Nothing in the content is intended as legal or financial advice.