Daily Digest News – February 23, 2021

Hand selected flexible workspace news from the most reliable sources to keep you ahead of the pack. We find all the latest news, so you don’t have to. Morning and afternoon updates. Stay in the know.

Here’s what you need to know today:

SoftBank And Adam Neumann Close To Settling Lawsuit

Former WeWork CEO Adam Neumann and Japanese conglomerate SoftBank are inching closer to settling their prolonged legal dispute.

The legal battle began after SoftBank offered to pay $3 billion for WeWork stock as part of its multibillion-dollar bailout. However, SoftBank withdrew the offer after the pandemic emptied WeWork’s workspace facilities all over the world. That’s when Neumann sued for breach of contract. 

SoftBank aimed to combine WeWork with another publicly traded special-purpose acquisition company, which would allow the coworking firm to become public itself. However, the lawsuit has left this plan in limbo because it is still uncertain how much control the Japanese conglomerate has over WeWork.

At the moment, the terms being discussed would involve SoftBank buying half the number of shares it originally planned to for $1.5 billion. Neumann would also get up to $500 million instead of the nearly $1 billion and keep more of his shares. 

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Low Office Rent Could Mean Good News For Tenants

Employers have discovered that remote working is not only cost effective, but also can have a healthy impact on productivity.

This has left landlords concerned about the popularity of this arrangement and how it could impact office takeup in the future

However, Craig Braham, CEO of Advocate Commercial Real Estate Advisors, believes the future of the office will be more nuanced.

Braham said that last year, transaction volume for his company was down 80% in Chicago.

Now, the company has over 5 million square feet of discounted sublease space being offered in downtown Chicago, which has driven rental rates down.

With prices being driven down as landlords attempt to sweeten the pot for tenants, Braham believes it’s a good time to take up space.

He added that while 75% of his company’s deals come from lease expirations and the other 25% comes from lease restructuring, he anticipates that this ratio will flip over the next two years.

“Say you are a firm with 30,000 square feet in Chicago but find now that you will only need 20,000 feet going forward. You could try to put the extra 10,000 square feet on the sublease market, but if you do you’ll find you’ll be forced to discount it by as much as 75 percent and be losing big money,” said Braham. “But if your lease is due to come up in two years you could go back to your landlord now and persuade him to take the extra space off your hands.”

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The Evolution Of Employee Expectations

A new report from JLL has found that the expectations of the workplace have evolved over the past year.

According to JLL, there are four personas of workers that have emerged from this time, including traditional office workers, experience lovers, wellness addicts and free spirits.

Traditional office workers, which take up 34% of office workers, mostly did not work from home pre-pandemic. They also have the belief that remote working is not the best option for their particular role.

JLL states that these people most likely work in environments with high presenteeism culture.

Experience lovers want the best of both worlds, with the desire for flexibility and the office as a destination. According to the report, 50% of these professionals worked remotely prior to the pandemic and expect to continue doing so at least one or two days each week.

Additionally, these workers typically favor hot desking, working out of alternative workplaces and embracing the four-day work week.

The majority of wellness addicts also had experience working from home prior to the pandemic. For these workers, work-life balance and health are their first priority. 

Having little to no commute and wellness-related workplace amenities that help balance personal and professional responsibilities are of the utmost importance for these workers.

Free spirits are those who want total flexibility. According to JLL, 17% of these workers worked from home at least three days before the pandemic.

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Many of these workers have a great fear of the virus and want their employer to create policies that help mitigate the risk of transmission.

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U.S. Workers Use Flexibility To Migrate To New Cities

Market research company The NPD Group has found that many Americans plan to move this year thanks to the increase of flexible work options.

The research found that 20% of U.S. workers were working from home full-time as of December, with 28% having relocated during the pandemic. Additionally, 20% said they had plans to move this year compared to the year prior.

The workforce has become increasingly comfortable having the ability to work from anywhere, especially knowing that they are even more productive. This has opened a door of possibilities to living in areas with a lower cost of living or closer to family.

In fact, with the increased interest in moving, inquiries and purchases for moving supplies and services have skyrocketed. The NPD believes that this growth will continue into 2021.

LinkedIn analysis found that the top two cities that workers from major cities migrated to from April 2020 to October 2020 were Austin and Phoenix.

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Preventing Workplace Burnout

The transition to remote working, juggling childcare and work responsibilities and financial constrictions have all contributed to what has been one of the most challenging times in America history.

Trying to balance all of these demands has left employees fatigued and overworked, which is the perfect concoction for burnout. So what can business leaders do to prevent the potential for burnout? 

The first step is to accept that the risk is real. While working from home has come with its own set of perks, studies have found that many professionals are taking on bigger workloads now.

Reconfiguring the company’s culture will be crucial. When dealing with a distributed workforce, the sense of camaraderie can suffer, so trying to keep workers engaged can help build up the company’s community.

Much of work-related stress has derived from the fear of slow career growth. In fact, a report from ServiceNow found that 31% of respondents felt that remote working has hindered opportunities for career progression.

By guiding employees and helping them identify growth plans, leaders can help them find areas of improvement and give them a greater sense of purpose.

Every employee is facing their own struggles, so leading with a hefty dose of empathy will be essential to create a healthy work environment. Using coaching methods, managers can learn how to be more empathetic and understanding to each individual employees’ challenges.

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The Office Sector Is Slowly Recovering

The most recent CommercialEdge Office National Report revealed that the commercial office industry is slowly recovering from the pandemic.

According to the report, the average national full-service equivalent listing rate grew 26 cents from December to $38.32 per square foot in January.

The report stated that office-using sectors have performed well in 2020 and office-using employment is on the path to recovery to pre-pandemic levels. However, the vacancy rate continues to climb.

This is particularly evident in cities with high lease rates like San Francisco, New York City, and even secondary cities like Nashville and Austin.

“While both are major beneficiaries of coastal outmigration, they are also dealing with major supply pressure. Nashville’s office stock increased 4.1% last year, while Austin’s rose 3.9%,” the report said. “Combining new stock with a heavy tech industry predominantly working from home has led to the uptick in vacancy.”

Despite the growth of office vacancies, the coworking sector has been a light within the industry as some commercial real estate firms adopt revenue-sharing agreements to bring tenants back in.

This is helpful as many businesses are still hesitant to sign onto long-term leases and look to flexible workspaces for an alternative workspace solution.

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