Remote work was already on the upswing before the pandemic. Now WFH (work-from-home) is firmly established in our vocabulary. In the post-COVID 19 era, remote work is in fact work-from-anywhere (WFA).
As part of the massive WFA experiment, companies have also realized that WFA does not mean less productivity. Frankly, employees crave the flexibility and the work-life balance that this new model affords.
Work from anywhere is the new normal. Work is Not a Place Anymore. The fallout is enormous.
Hybrid and Remote Options
According to a recent survey, 82% of US office workers say they want to continue to work from home when the pandemic is over. But only 16% want to jettison the office forever. Thus, a high percentage of employees do not see the office of the future disappearing!
Many companies are taking the next logical step and moving to a hybrid model, where employees spend some time in an office setting, and the rest in a place of their choosing. Those companies that can move to an all-remote workforce (not all companies have that luxury), are considering that option. Tech companies can do this more easily than say, a manufacturing plant.
McKinsey has created a matrix of six models that aligns a company’s preferences based on hiring needs, productivity concerns, and real estate costs. These are useful new work models to consider when contemplating the best option for a company’s given situation.
The savings from a move to a remote or hybrid work environment can be determined in advance using a calculator e.g. like the one at globalworkplaceanalytics.com (shown below). A typical employer can save as much as $ 11,000 per remote worker per year.
There is research to suggest that even before the pandemic, 56% of employees had a job that could be done remotely. A third of workers were willing to take a pay cut in exchange for the option to work remotely. Clearly, flexibility to work from anywhere, remains an even higher priority for younger workers, and employers would do well to consider the needs of that growing workforce in the current situation.
Companies that no longer care where you work
In a recent survey of 4,400 technology employees, two-thirds said they would consider leaving the area permanently if they could work from anywhere. If one can live in smaller towns with good schools, a better standard of living, and a good mix of cultural and outdoor pastimes, many city dwellers are deciding to pick up and leave. The de-urbanization phenomenon may have begun in earnest.
Technology companies that have rapidly moved to hybrid or even permanent remote models include big names like Salesforce, Apple, Microsoft, Xerox, Dell, Okta etc. Healthcare is another sector where large percentages of staff are now allowed to work remote.
Particularly for the digital nomad, an entire industry catering to their needs is now gathering steam. Home exchanges are becoming very popular. Elite Alliance, a company based in New York, has built an exchange network of 130 upscale resort properties around the world in iconic destinations like: Cabo, Italy, Telluride, Bermuda, Florida Keys, Morocco, Greece and more. Countries from the Caribbean to exotic European locations are now offering work abroad visas to make this easier.
Impact on Real Estate
The impact of these changes on the office centric real estate sector are likely to be massive. In the bay area, home to some of the most expensive real estate in the world, rents are falling, and leases are being cancelled. We are now even hearing of bankruptcies in the bay area, something that was unthinkable not too long ago.
Pinterest recently paid $ 89.5 million to terminate a San Francisco new office lease due to the changing work environment of their employees.
It seems the one place where employees may need more office space is in their homes, not in their office buildings. Those who rent homes, are now looking for amenities like high speed internet and co-working spaces, and this is creating a rapid change in the services being offered by the rental real estate market.
Overall, demand for office space is falling by as much as 20-30%, and this will create very different valuations for office real estate. In the Boston area, one estimate sees as many as 50% of workers stay at home post-COVID. According to another report, there is a large percentage of subleases hitting the market.
Where leases are coming due, companies are seriously considering a radical shift to a new paradigm of hybrid work, where they need far less office space than before. An entire new niche of consultants has emerged (including #WellforceIT) to help companies move to the most appropriate hybrid work model of the future.
Recruitment and Hiring
When you can recruit the best and most affordable talent from any place in the world, and not miss a beat, companies are increasingly electing to do just that. Geography is not a boundary anymore. Soon, language may not be an issue either.
Companies like Upwork, Freelancer, and Flexjobs are focused on this market of gig workers and those looking for remote jobs.
Amidst the race to become the ubiquitous organization, yes, we still have naysayers, who think this shift will not, or should not happen. Among them are at least three prominent companies and names that should surely surprise you: Zoom, Netflix and Amazon.
Amazon is adding 3,500 employees in six major cities. In New York city, Amazon recently purchased a building for $ 1.15 billion from of all companies – WeWork, the co-working space company!
The Netflix founder and CEO, Reed Hastings, was recently quoted in a WSJ interview as arguing that he doesn’t see any positives from the WFH syndrome. According to Reed, as soon as there is a vaccine, it is back to the office for Netflix workers. It will be interesting to see how many other companies follow suit in a post-vaccine world.
According to Yuan, the CEO of Zoom, “When you’re working in the office, stopping in hallways for a quick chat — ideas come from that, or in a conference room, with a whiteboard…that’s where creativity comes from. From a creativity perspective, working from home is not as good as working in the office.” His company may be the single biggest beneficiary of the work from anywhere culture. Zoom is now a verb meaning video calling!
Whether work remains a place in the future, or is just something that we all do, regardless of location – time will tell. For many, including me, it is hard to imagine that we would all go back to a time where going to work means going to a specific place every day.