The world was thrown for a loop when the COVID-19 pandemic hit, and the real estate industry was no exception. Between people losing their jobs and a huge number of companies shifting to a remote model of working, the year in lockdown had a tremendous impact on the commercial real estate market in the United States.
Even as things begin to slowly shift back to normal, employees everywhere have settled into a comfortable routine of working remotely. And as companies plan for the future, they are trying to decide on the best model for the future of their workforce. The pandemic removed the mystery for large-scale working from home and, as a result, many organizations are shifting to a hybrid model that combines both office collaboration and remote work.
Benefits of Remote Work And a Hybrid Workforce
There have been a number of benefits to a hybrid workforce, including:
- Increased productivity
- Improved employee satisfaction
- Lowered costs of business
- Reduced carbon footprint
The ability to work remotely is one of the most appealing benefits to today’s job seekers. In fact, most workers would take a cut in salary to be able to work remotely and have more flexible work options. This shows the value that employees place on work-life balance, and happier employees lead to higher retention and loyalty — a win-win for everyone. A hybrid workforce also leads to increased profits for many organizations, since not having to maintain a physical building (or as large of a physical space) means a drastic cut in overhead costs, such as rent, utilities, office supplies, and more.
How is the Hybrid Workforce Impacting Physical Space?
The hybrid model is not only impacting the workforce, but also what physical space looks like. Let’s take a closer look at 3 ways the hybrid workforce is impacting physical space.
Sublease Space Will Continue to Increase
We expect to see further softening in commercial office space, caused by lower demand as more employers shift to a hybrid workforce model. Sublease space will continue to increase, as the demand for traditional office space continues to weaken and tenant concessions rise.
Coworking Space Will Continue to Increase
As the workforce continues to shift to a hybrid model, we also expect to see a rise in coworking space, shared spaces where working of different companies share an office space, allowing for cost savings and increased convenience. Features include common infrastructures, such as office equipment, utilities, and even reception and janitorial services.
Shifts in Retail Space
Today’s hybrid workforce not only works more from home, but they are also shopping from home more, as well. And this shift has carried over into the retail sector. With brick and mortar stores reopening after the pandemic, the retail sector will be energized — but the long-term growth of retail space is uncertain, with a record number of retailers experiencing struggles in supply chains, shipping, logistics, and more.
The demand for high-quality retail centers anchored by grocery stores will continue, but other retail space will likely cool in 2022 and beyond.
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