Real Estate And The Future Of Work
In the future, will we all work from home?
This is one of the most-asked questions resulting from the Covid-19 shutdown — understandably so, after a long nationwide experiment in working remotely and handling meetings over Zoom and Slack. In fact, many New York City businesses are going into their fourth month of remote work as of this article — the city has not reopened yet for the entirety of business activities that Manhattanites are involved with.
While many corporate announcements and speculations have been made about "working from home forever," I do not believe this will happen. Humans are just not made for that.
From a real estate perspective, the need for central business districts and office buildings will continue. And so will the need for urban residential buildings close to work.
In periods of crisis, people rapidly forget about normal life. But for the commute times saved, let us be realistic: Day after day, more and more of the national workforce drifts away. Without an office environment to commute to and provide a sense of discipline and general energy, we have all witnessed members of our work circles become demotivated with tasks they would swiftly deal with in a normal work environment.
Without an office, the "work-life balance" expression loses its meaning. Not to mention, employees with young children and those who lack a proper desk setup or the technological bandwidth (e.g., internet speed) to maintain office-like productivity can find it harder to focus at home.
How many Zoom calls and group messages these days end with "looking forward to seeing you in person"? Humans crave social contact. In fact, on a sad note, social isolation has sparked an increase in the country’s suicide rate during the pandemic.
Facebook has announced that as many as 50% of its employees could work from home within the next five to 10 years (Fine print: Most likely for a pay cut), and Twitter has proclaimed that its employees could "work from home forever" (Fine print: If their position allows for it). Even if tech companies are more likely to succeed with this due to their very nature, they still thrive on creativity and company culture.
The economy is the other reason we will likely go back to office work en masse. A company might be able to maintain its company culture remotely and online for a limited time, but not forever. And new companies may struggle to create a company culture remotely because this often requires in-person time that allows teams to bond.
And then there are meetings. Meetings allow us to brainstorm with a different mindset and more fluidity than conference calls, which, by nature, have to be directed by one person or group of persons — the conversation doesn’t flow fluidly, hindering the development of ideas. Meetings also allow for sales to be made. Chances are, you will only perform virtual sales calls until your competition starts to visit your prospects in person to close deals.
Different times call for different measures. Office spaces will certainly evolve and adapt to the current environment. Open floor plans, for instance, might have to be partitioned for health concerns, at least temporarily. Buildings may be rated by some form of "health index" to make occupants more comfortable.
Arguably, companies may also need more office space in order to comply with social distancing measures while still being able to hold the same number of employees on-site. JPMorgan, for example, announced that it will bring back 50% of its workforce to its Manhattan office by mid-July, with plans for more thereafter, marking desks with green or red signs to indicate where employees can sit. Interestingly enough, the tech-savvy bank kept 20% of its workforce at its offices during the pandemic.
I don't believe employees will leave big, "superstar" cities. These cities will thrive again as soon as what made them more productive and successful comes back: the ability to gather with the best and the brightest and the possibility to interact with others frequently and let the results "take care of themselves."
Like everybody, I am eager to resume life as we knew it, safely. In my experience running a real estate private equity company, working from home is nowhere near as productive as being in the office, and being in the office alone is not as productive as being in the office with my full team. This is when things really swing, and my firm is at its best. So, "let’s twist again, like we did last summer."
By Remy Raisner