Away From The Office – Permanently? How Working Remotely Is Changing Real Estate
Wednesday, October 2nd, 2019
A corner office isn’t what it once was. No office is.
Technology has made it easier than ever for people to work remotely, handling their jobs from wherever they happen to be at any moment. That flexibility affects more than just how people schedule their lives and work assignments. It also has a large impact on real estate.
“The ways in which real estate gets bought, sold, leased, managed, and so on have already changed dramatically in recent years because of technology,” says Aaron Block, co-author with Zach Aarons of PropTech 101: Turning Chaos into Cash Through Real Estate Innovation (www.proptech101.com).
“The rise of telecommuting is one more way in which technology is changing how people work, and that affects how much office space a company needs, possibly the length of their lease agreements, and other factors that the commercial real estate world needs to adjust to.”
Block and Aarons, co-founders of MetaProp, a leading PropTech venture capital firm, say the challenge for the real estate industry will continue to grow as more people, and their employers, discover the flexibility and cost savings telecommuting can provide.
Already about 40 percent of the American workforce works remotely at least on occasion, according to an analysis that GlobalWorkplaceAnalytics.com conducted using the U.S. Census Bureau’s 2005-2017 American Community Survey.
“Part of this is driven by changing demographics, with millennials now the largest generation in the workforce,” Aarons says. “Millennials are the architects of the so-called sharing economy, and they are fine with spending their workdays in coffee shops or co-working spaces.”
Block and Aarons say some ways all this impacts real estate include:
What companies expect from an office is evolving. “In fact, the whole notion of office space – how it looks, where it’s located, how it’s valued, the services it offers – is shifting,” Block says. A number of tech-enabled firms, such as WeWork, Convene and TechSpace, are not only changing the way office space is leased, managed, and configured, but also how it is conceptualized. To remain competitive, commercial real estate firms will need to offer space that has more services and has flexible leasing terms, he says.
“Many businesses and workers today do not want to be tied to long leases and oppressive space with cubicles, fluorescent lights, and bad coffee,” Aarons says. If workers spend much of their time elsewhere, companies no longer need the amount of space they once did, so sharing conference rooms, kitchens and other facilities with multiple businesses just makes sense.
Yes, there are apps for that. Whether you are a freelancer or part of a large team, you can book workspace through apps, rather than going through more traditional methods such as responding to a newspaper advertisement or contacting a property manager or a broker. Spaces are available in all shapes, sizes, and locations for any length of time. “You can book space for a month, a year, or even by the hour if you want,” Block says. Aarons recognized the potential for the real-estate-on-demand trend early on and was in investor in Breather, one company that helps people make those connections.
“Technology already has had an enormous and lasting effect on numerous industries, such as taxi companies and the newspaper business, in some cases upending companies that once were very profitable,” Aarons says. “Unless real estate practitioners want to follow in the footsteps of some of those businesses, ignoring the ways in which technology is remaking the industry is not an option.
“Instead, make sure you keep tabs on the tech trends likely to affect your business. Building a realistic strategy that takes emerging threats and opportunities into account is more critical than ever.”