Home Office Trend：What Does It Mean For Real Estate?

The global pandemic has reversed the corporate culture of high-tech companies, making home office a mainstream choice.

Recently, world-renowned high-tech giants have announced their new home office policies. Facebook and Twitter both allowed that employees can work from home forever. Google said that employees are allowed to work at home before the end of the year. Shopify announced that the company’s office will not be open until next year. Microsoft and Amazon decided that employees will come to the company until October.

1 Has the office-working age come to an end?

For a long time, high-tech companies have always believed that the interaction between employees is the key to maintaining creativity and productivity, with a strong emphasis on the corporate culture of office-centric.

They spent a lot of money and painstakingly designed a humanized office environment, providing free cafeterias, dry cleaning services, gyms, and theaters, so that the office has everything, and employees are willing to revolve around the office. In order to encourage employees to live near the company and facilitate work, Google also subsidized at least $10,000 for employees who moved to within 10 miles of their headquarters.

However, the pandemic kept all offices closed, and employees could only work at home. More than two months later, these companies were pleasantly surprised to find that employees who work at home performed more than they expected, and work efficiency did not decrease. Facebook CEO Mark Zuckerberg said: “Even when working at home, employees are very focused.” In addition, employees are very comfortable after working at home and have expressed that they want to continue after the lockdown.

A poll conducted by Gallup showed that only a quarter of employees wanted to return to the office, and a quarter of employees were reluctant to go back because of concerns about the pandemic, and half said they prefer to work remotely.

New Zealand also conducted a similar survey and found that 89% of people hope to continue to work from home in the future.

This situation has caused many high-tech companies to change their attitudes, and have expressed their desire to embrace the future of the remote office.

2 Benefits of home office

Zuckerberg said that remote work can enable Facebook to expand the range of recruiters and obtain more talents, and also reduce the impact of the climate on employees commuting.

Of course, there is a huge benefit that Zuckerberg did not say, that is to save the company’s operating costs. Data from global workplace analysis companies show that the home office can help US companies save at least $11,000 per person per year.

If employees work from home, even if the company is reimbursed for computers & phones and other office expenses, it can save considerable rent.

In addition, if employees use their commuting time for work, even if they work an hour more each day, then the company has 100 hours of work time if the company has 100 employees, which is equivalent to adding 12.5 eight-hour full-time employees every day.

3 Home office: what does it mean for real estate?

If the home office becomes the future development direction, it will have a permanent impact on commercial real estate companies and shared office enterprises like WeWork. However, these shocks may not be apparent in the short term, because many high-tech company office leases are signed for a relatively long time (at least 5-10 years).

The cost of living is so high, if you can work permanently at home, why not move to a place where housing prices are cheaper and the air is cleaner? At present, it seems that a large number of employee outflows are affecting the housing market.

Zumper, the rental company, said that since the outbreak, the cost of housing in the Bay Area has declined: rents in San Francisco fell by 7% in April, and rents at Menlo Park, where Facebook’s headquarters is located, fell by 15%.

According to a report by NBC Business Channel, some people in the real estate industry found that the demand for housing types is changing. Compass, a real estate website, showed that the search for independent houses on its website increased by 40%, while the search for apartments was declining. It means that more and more people tend to choose low-density housing.

Nearly 200 million people in China are working remotely during the pandemic. The home office period of more than 28 days has also helped employees cultivate the habit of using remote office devices. After the pandemic, the remote office is still expected to be more widely used and upgraded, becoming an important part of people’s work and life.

If Internet companies’ telecommuting is widespread, employees will move out central-city in the face of high housing prices in China’s first-tier cities. Internet recruitment platform BOSS recently released the “Q1 2020 Talent Attraction Report” shows that the net outflow rate of first-tier cities in the first quarter of this year is 0.91%, reaching the highest value in two years. These people who fled the “Beijing Shanghai Guangdong” chose to go to Xi’an, Chengdu, Nanjing, Tianjin, Hangzhou and Wuhan, etc, -second-tier cities; in addition, data also shows that online skills have become necessary for survival.

For real estate developers, these are phenomena that are worth thinking about. The development of the home office will affect the investment of commercial real estate, and some non-first-tier cities with high livability will become the choice of more people.

No matter how the trend of home office development is, the global industries it represents are accelerating the embrace of the digital economy, and the direction of achieving a faster digital transformation will not change. If you have any questions about the article or want to discuss with us, please leave us a comment below or email us: contact@ideamake.cn.