40 hour workweeks in an office could be a thing of the past...
As I wrote in my recent Q3 office report, office investments are in a state of transition. For the past few years prior to Covid, there were grumblings that technology was going to change how we work and interact in traditional office space and that there could eventually be a work from home component to modern business. Yet the reality was that trend was largely ignored and the work from home phenomenon was mostly left to maternity and health related employees looking to stay connected.
Fast forward to our new reality and work from home could be a major long-term disruptor that wasn't forecasted even six months ago. The Conference Board recently published a new report showing the differences in how companies are preparing for the long term. According to their survey, over one-third of large businesses that responded said that more than 40% of their workforce would work remotely an additional 12 months after the pandemic. Only 4% responded with a positive work from home attitude prior to the outbreak.
Companies are beginning to realize that employees can remain productive as they've transitioned their homes into offices. Add to the fact that companies can now recruit nationally, hold less office overhead, and give more work/life balance to their employees, and you can see how this might look attractive looking forward. This trend isn't all positive, however, and companies will need to look at how work from home effects company culture, team building and collaboration.
In terms of office investment, it's going to be important to monitor a number of factors:
-Office rent collections
-Tenants in the market
Like many asset types, including hotel, retail, and industrial, Covid has accelerated trends that we couldn't comprehend just six months ago. It's important as investors to stay up to date on the market trends and influences that could affect yield, timing, debt and long-term growth. In times like these, it's very important to be proactive in your investment approach.
About the author:
Michael Hironimus, CCIM is the Certified Investment Advisor and Principal Broker for Duckridge Realty specializing in commercial real estate investment portfolios for high net worth clients and institutions, focusing on market, financial and risk analysis. He is also a faculty instructor for the CCIM Institute, teaching professionals globally in the CI-102 Market Analysis Core Course.
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