The concept of remote work traces its origins back to around the 70s when a minor contingent of forward-thinking workplaces toyed around with “telecommuting” through phone and fax. The concept gained more traction at the dawn of the Internet Age, but things mostly looked the same – nine-to-five offices and in-person meetings.
Then, everything changed. First, it changed slowly: throughout the 2000s and early 2010s, more progressive companies adopted work-from-home or flex models to attract top talent (mostly web designers and engineers). Then, it changed quickly as the pandemic upended common notions of work and workspaces, allowing a broad range of jobs to find a home online.
Skip to the present. Remote and hybrid work now commands a sizable share of the working population. And its impacts – particularly in real estate – are beginning to reveal themselves. In this article, let’s chart a few significant real estate repercussions of the modern remote work boom.
Perhaps obviously, the rise in remote work is inversely related to the dip in office building demand. Companies that gravitated wholesale to a remote model let go of their commercial real estate leases or sold their holdings. Meanwhile, companies that migrated to a hybrid model (in-office mixed with remote) decided to downsize their office spaces to accommodate a rotating roster of employees.
In either case, office buildings are in trouble. According to the Financial Post, remote work will “wipe out $800 billion from office values.”
The Rise of Flex Spaces and Hybrid Buildings
All is not lost for the commercial real estate industry. According to McKinsey, developers and owners can adapt to the changing nature of work by creating flex spaces – or “hybrid buildings.” These flexible spaces can accommodate various uses: industrial operations, storefronts, offices and even residences.
We’re already seeing some developers adopt the concept. But you can expect to see flex spaces become more popular as a consequence of the remote work boom.
Remote workers quickly realized that because their work requires no physical presence, they’re pretty much free to be wherever they please. Whereas before, workers concentrated in urban areas to remain close to work, now they can purchase larger homes in suburbs or rural areas and work that same job.
This has resulted in a broad push toward suburbanization. But, perhaps more importantly, it has caused a sharp increase in sight-unseen sales. In an interview with Medium, real estate expert Regan McGee stated that “Since the start of the pandemic, there has been a huge rise in sight-unseen real estate sales, signaling a huge shift in how people buy and sell property.” His company, Nobul, is one of the technology companies helping facilitate that shift.
This story is still in its nascent stages. As the dust settles from the pandemic, and people continue to move toward remote and hybrid work models, expect to see even more changes in real estate.