By Ade Labinjo, Co-founder of Breezeful
Even before the coronavirus pandemic made it impossible for so many businesses to continue operating from their offices, forcing them to move to remote working or stop operating entirely, there was a clear trend towards the practice of working from home. The technology has been there to support it for over a decade at this point, and much of the reluctance to embrace it has stemmed from concerns about productivity that have now been proven unfounded.
Due to this, there’s a distinct probability that demand for office space is going to drop significantly as COVID-19 becomes more tightly controlled and industries throughout the country attempt to return to normal operational levels. For those companies, the prospect of greater flexibility and efficiency is very tempting — but it isn’t a good notion for everyone.
Consider the corporate real estate industry, for example. If businesses across the board decide that they’re better served without office space, where will that leave it? To simply answer the titular question, corporate real estate companies should be worried about remote working — but they shouldn’t be despondent, because there are reasons to be optimistic. Here they are:
It’s getting easier to find and afford property
Even if interest goes down significantly, it will be offset to some extent by everything the online world is bringing to the real estate marketplace. The regular real estate process is being transformed by online convenience: it’s now possible to find and filter viable properties online, view them remotely using 360-degree videos (and even VR experiences), and even use a mortgage broker remotely to find a competitive deal.
The same can be said of the corporate real estate, only with bigger budgets stemming from business-level spending power and the superior level of financial management that it can bring to bear. And since the space that’s being freed up through lowered interest will inevitably be used for something, we’ll either see a reduction of rates from property owners (something that will still allow estate agents to make their money) or further growth in the coworking sector.
Coworking space will experience a resurgence
Speaking of coworking space, you may have read that the coworking industry has been hit incredibly hard by the COVID-19 pandemic, and that’s undeniable. It was a thriving sector beforehand, and the lockdown measures were horribly timed for all those who were investing so heavily in it — but this doesn’t mean that the industry is finished.
As things steadily revert to type, we’ll surely see no shortage of companies eager to work flexibly but still have office space. After all, maximum productivity stems from the flexibility to work in whichever ways are most effective. In some instances it’s best for people to work remotely (if they’re working on individual projects, for instance), but in others it’s preferable for them to work in close proximity to one another.
The conventional office is still a status symbol
What do aspiring business owners dream of achieving? They want to reach certain levels of profitability, of course, and hire talented teams, and do good work — but they also want to have their ideal offices. It’s a core part of entrepreneurial ambition for most people, and has been for a long time: rationally accepting that it isn’t financially justified won’t change that, nor will the shift to smaller offices (despite what GlobeSt thinks).
Due to this, there will always be business owners willing to spend heavily on setting up office space. Smaller companies with modest budgets will be reluctant to invest, but those making a lot of money will certainly find the money for a status-boosting office. Factor in the numerous businesses that still need to work from shared offices to be effective, and you have more than enough desire and spending power to keep the industry afloat.
As I noted in the intro, corporate real estate companies are certainly justified in being concerned about remote working, but only to some extent. Traditional offices are sticking around, and entrepreneurs will dream of their perfect offices for decades to come.