Work From Home: Reinventing Commercial Real Estate
The shift to working from home has affected many people, both directly and indirectly. Even business owners who cannot work from home anymore are finding changes, as people no longer head to the coffee shop or restaurant by their work on breaks or during lunchtime. As you take a closer look, working from home has led to a shift in commercial real estate, and there will likely be more changes to come.
Changes to the Types of Commercial Buildings for Offices
In the past, companies would look to buy or rent large office spaces where they could house a large number of employees. Some larger companies would even have entire campuses that include offices, cafeterias, and other resources for workers.
As more people work from home, this becomes less and less necessary. Companies no longer want to pay for large spaces that will go unused. Instead, they want more flexibility in their spaces. They want options that can scale to adjust to changing numbers of people working from home.
This trend means that more office space has become available in the last year. This trend will continue as people continue taking advantage of the opportunity to work from home.
Residential Real Estate Impacts Commercial Real Estate
With the ability to work from home, people realize that they do not need to live in cities to be close to work or put up with the high housing prices associated with cities. This has led to a migration to the suburbs, a trend that experts predict will continue.
Even though that shift in real estate is residential, it can affect commercial real estate. After all, with fewer people living in cities, fewer retail businesses, restaurants, and other commercial spaces need to remain open to accommodate everyone. This is especially true when people are not in the city for work or while at home.
This is already obvious, with small business sales in cities already declining 40–50% between the shift to the suburbs and lockdowns.
Future of Commercial Real Estate
There is some concern for the future of commercial real estate. Specifically, the regulators in the United States have expressed concerns about the debt in commercial real estate.
Experts predict that any transition back to people living and working in cities will be slow. People want assurance of their safety. They will also need a good reason to give up the convenience of working from home.