With progress on the pandemic front due to successful public health interventions and the roll-out of the vaccines, people are starting to see the path back to “business as usual” and the return to offices. Our extended experience of work-from-home has altered the equation permanently. Various companies like Salesforce and even the Commonwealth of Massachusetts are planning to let people work from home in significant ways in the future. How will commercial real estate respond? CRE value depends on tenants paying for space!
JLL issued a report that describes the trends and “emerging user profiles” for office space. The takeaways are that 66% of workers want to work remotely following the pandemic, and about half the workforce will want to work half-time in offices. Does this mean an outright 25% reduction in demand? I think the types of enterprises matter, the type of work matters.
Reports like this are shaping the narrative around #ReturnToWork and the future value of #CRE. JLL fails to describe the real health benefits of a curated workplace experience and the economies of scale that such curation/management have on productivity. Of course, most workplaces skip this stuff, but it will be competitive advantage for tenant market share in the months and years to come.
Separately, I assert JLL’s report is quite a myth-maker and subject to confirmation bias: 2000 respondents? What 10 countries? Pray tell how a “representative” sample of worker types can truly be constructed. And of course, in such a limited market (office experience), can people really know what they want? For which purpose? Their satisfaction or the satisfaction of their employer paying for the space?
I believe there will continue to be a value proposition for office space, not just the “socialization” and corporate culture dimension highlighted by JLL, but also a fundamental focus on productivity for tenants through health and creativity curation. Regardless, observe the circus of these reports coming through from everyone scrambling to address the “shrinking” demand for office space!
Looking back one year ago, from the Gensler report of April, 2020: “Be open to new ways of working. The longer we work from home in large numbers, the more new habits and new ways of working will begin to take shape. We will have discovered different ways to collaborate virtually, which may likely continue when we return to the office. Workflows and communication might improve. We should embrace these changes and let them flourish.”