Five trends for office: What will work look like by the end of 2021?
Originally posted to IREI.com
It’s December 2021. We (hopefully) have a vaccine for coronavirus. But we’ve been through waves of sickness, months of shutdowns and slowdowns, and hundreds of thousands of deaths. People have grown accustomed to working from home and having flexibility. Companies have shifted their models. Health and safety remain a top priority as companies prepare for any future pandemics. We’re back to some semblance of normalcy, but it’s no longer business as usual. What’s changed in the months since we first heard about coronavirus?
While we don’t have a crystal ball, we can make predictions based on historical data and analysis. In this forecast, we take a deep dive into the future of the office. These are the big trends we’re noticing and feel will continue through 2021.
Prediction 1: The rise of secondary cities
Secondary markets will become increasingly attractive to a growing pool of workers not tied to an office space, or those looking for a more affordable option. Markets such as Sacramento will grow, while the population in cities such as San Francisco will continue to stagnate in the short term.
Shortly after the news of a global pandemic, many states went into a mandatory lockdown to prohibit the spread of coronavirus. For many, quarantine was long and suffocating, while for others it was quite liberating. People’s daily routines were put to a screeching halt, and they were forced to take a step back and evaluate their lives. As a result, many are choosing to move away from the dense city for a more open, relaxed lifestyle.
Secondary markets are seeing a rise in population as an outcome of companies, such as Twitter and Facebook, allowing for indefinite work-from-home models. People prefer to live in places where they don’t need to spend as much on rent and/or they can afford to purchase. Quality of life and amenities are receiving a greater focus than they have in the past.
Prediction 2: The hybrid office model takes off
Companies will embrace a hybrid model and shift how office space is used. The new priority for offices that remain open will be health and safety.
To adjust to post-pandemic office life, companies are reimagining the physical space and embracing the hybrid model. When employees were forced to work remotely during the pandemic, many companies realized that maybe office space isn’t as essential as it used to be, and they can still conduct business at home. Having an office has its perks, however. Offices encourage collaboration, shared culture and socializing, which can lead to productive brainstorming sessions, new ideas and innovation.
The hybrid model that some companies are considering — one where some employees work remotely, while others work Monday through Friday in an office setting — has its pros and cons but provides a flexible solution to the post-pandemic workspace. Psychological and subliminal strategies can be used in the workplace to distance employees. Another tactic for new offices being built is having construction materials made of antimicrobial substances to reduce the spread on surfaces, as well. Air filtration is an additional aspect to keep in mind. As a temporary fix, portable air purifiers can be installed to keep clean air circulating until HVACs can be replaced with more effective models. Even the simple alternative of opening windows so the office air doesn’t congest allows for fresh air to enter the tight space.
Prediction 3: A reinvigorated WeWork
Co-working is not over. WeWork Cos. and collaborative workspaces are going to be a big winner.
WeWork, Regus and other shared office spaces have seen conflicting opinions on their future, with industry pundits falling on both sides of the question: Will they grow in popularity or fall off the face of the Earth after the pandemic?
That said, many company executives and seasoned professionals know the value of the in-person work experience, especially for mid-size and smaller companies building culture and community. Shared office spaces allow for these firms to ride the wave of workplace uncertainty one month or year at a time by renting a location from WeWork or Regus. This system will be viewed preferentially by many employers because they will have the ability to customize their workplaces. People love having options; shared office spaces feed into that desire.
Why be optimistic about the future of WeWork? There’s a new leader at WeWork, CEO Sandeep Mathrani, and he has a plan to make the company profitable. The strategy is to rely more heavily on big corporate clients and reduce the number of WeWork locations. As COVID-19 shifts how corporations view office space — as some crave more flexible, scalable models — Mathrani’s strategy could pay off. He anticipates large-company users could account for as much as 70 percent of membership in the near future, up from about 45 percent as of summer 2020.
Prediction 4: Better office space for small business owners
Small businesses will climb up the food chain and grab downtown real estate at double-digit discounted rates.
Small businesses in primary markets can especially capitalize on the shifting office landscape. In markets such as Chicago, with its iconic Loop, skyscraper occupancy is downsizing, and smaller companies can move up the food chain, so to speak. They can get pristine real estate at a better rate — potentially a 15 percent to 20 percent better rate than before the pandemic. Now, the business has office space in the Willis Tower or Transamerica Building, which they would have never entertained pre-pandemic.
The idea to sign a lease or even purchase an office space during a pandemic might seem counterintuitive: Why take on such a risk during an uncertain time? But that’s the point. To be contrarian during a recession is to be in a position to gain a lot after the recession wears off. Whether it’s a direct monetary gain through an increase in a real estate investment, or the added brand prestige from a desirable location you wouldn’t otherwise consider outside of a pandemic.
Prediction 5: Microbusinesses spreading their wings
Freelancers and contractors will continue to spread their entrepreneurial wings in a more remote, flexible economy.
As office space decreases, the burgeoning economy of self-employed freelancers, contractors — what we could refer to as microbusinesses — continues to rise. Sometimes referred to as the “gig economy,” there are millions of temporary work engagements where a microbusiness or sole proprietor is paid for specific jobs or projects, as opposed to serving as an employee.
The gig economy has always been around, but now it is more relevant than ever and can be seen in both primary and secondary markets. More than one-third of the U.S. workforce freelanced in 2019, according to the Freelancer’s Union.
Due to the changes in work life caused by the pandemic, people of all ages are gravitating toward this nontraditional form of employment for many reasons. Remote, contract work is just as appealing to businesses that want to hire individuals on a task-to-task or campaign basis. As some employees get comfortable with working from home, more will explore gig work and more companies will consider gig workers on a per-project or part-time basis. The gig economy inevitably creates a more shared economy, as workers have more fluidity. This can spark innovation.
What it’s like at the end of 2021
The 2020 pandemic changed the way we view working, forever. There is no longer “one way” to work for traditional office-based employees. We now have the technology to be as proficient at home as we once were in the office. With this comes great change. Regions and local economies across the country were impacted by the lack of commuters, and many businesses did not survive. Those that did survive did so by conforming to the new social norms. And those that thrived did the same thing every thriving business has done in the past — they adapted and innovated within an evolving economy and society.
Ryan Swehla is principal and co-founder of Graceada Partners. This article is an excerpt of a report published in summer 2020. The full report is available here.