Career Guide

Report: Pandemic Effects on Work Arrangements Also Hitting Office, Retail and Residential Real Estate

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As some employees resist companies’ plans to return to the office after the coronavirus pandemic, a hybrid schedule that combines working from home some days with working in the office perhaps three days a week has implications beyond the workplace, CNBC reports. As a result, many cities could find their fiscal health imperiled.

According to a new report by the McKinsey Global Institute, based on a survey of large firms in nine cities around the world, including New York, San Francisco, London and Tokyo, many companies have left it up to individual employee teams to decide which work arrangements suit them best. Office employees cite working in teams and higher productivity as top reasons for being on-site at least part of the time.

But the flexibility in work arrangements afforded to employees is helping drive down demand for office space. Office attendance has stabilized at 30% below pre-pandemic levels. By 2030, demand for office space will be as much as 20% lower than it was in 2019, depending on the city, McKinsey predicts.

Remote and hybrid work are big reasons for the decline in office-space demand, along with automation and the trend of fitting more desks into less space. Lower demand for office space has companies rethinking how to make their real estate meet new work habits.

Remote and hybrid work have also changed where people are choosing to live, McKinsey found. Of those surveyed who moved after March 2020, 20% said their moves were possible only because they could now work from home more frequently. Researchers found that people moved out of expensive, office-dense ZIP codes into more affordable areas that offer more mixed-use real estate that combines residential, commercial and office spaces.

Besides changing work and office cultures, the pandemic also altered shopping patterns, as remote and hybrid workers are less likely to patronize businesses near their employers’ offices.

“Untethered from their offices,” the report says, “residents have left urban cores and shifted their shopping elsewhere.”

[Photo credit: dc studio]

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