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Here’s what you need to know today:
- Addressing Future Of Work Needs
- Decreased Office Density Could Mean Decreased Demand
- Remote Working Requires True Flexibility
- Tenant Experience App Receives Big Funding
- Medical Coworking Could Keep Occupancy Afloat
- Tech Remains The Top Industry For Office Leasing
Addressing Future Of Work Needs
Monster Worldwide conducted a global Future of Work Survey and a series of polls that provide insight into what changes employers need to make to accommodate the evolving needs of the workforce.
According to the survey, 82% of recruiters have plans to hire, a glimmer of hope following a year of record-high job loss.
However, because of the worldwide societal transformation, companies will need to adjust their work arrangements to attract and retain the workforce.
“I predict that, despite virtual and flexible work options continuing to work for some sectors, we will see an increase to some approach to an in-person work environment, especially as the vaccines become more available,” said Scott Gutz, CEO of Monster.
The survey revealed that at the beginning of the pandemic, most employers felt that remote working arrangements would be successful. But a few months in, workers started to feel the burden of isolation and their productivity was impacted.
In fact, the research revealed that almost 80% of remote workers felt that stress and anxiety inhibited their productivity. Even more, 34% of employees expressed feeling burnout by May, with that number skyrocketing to 70% by July.
Along with hurting job performance, nearly half (46%) of respondents said they experienced job-related anxiety and/or depression last year.
It’s clear that the past year of precedence has had a negative impact on many, so employers need to have a headstart on reenvisioning their current benefits program to include more flexibility to improve work-life balance, resources to support mental health and more.
Decreased Office Density Could Mean Decreased Demand
CoStar Group is anticipating that the era of high-density offices could be over as hybrid working becomes the norm for much of the workforce.
CoStar expects that the hybrid model, allowing employees to part-time at home and in the office, would be the most efficient arrangement for the future. Workers and employers both have expressed wanting flexibility in the workplace, while also wanting the camaraderie of the office environment.
Demand for office space will depend on three factors, including sustained remote working, changes to office density and employment growth for office jobs.
However, CoStar calculated that the increase of remote working and decreased office density could lead to less demand for office space. For example, a 34% boost in remote working and 20% increase in square footage per employee could still decrease overall demand by 12%.
Although it appears there could be an overall decrease in demand, CoStar expects that Class A properties will continue to thrive, while middle and lower-quality buildings will be at risk.
Additionally, the commercial real estate group believes that Atlanta, Austin, Charlotte, San Francisco and Seattle will see an increase in office-based work. This offers a glimpse of promise, as office-using sectors will indicate how well the office industry prospers in the near future.
Remote Working Requires True Flexibility
A King’s College survey shows that employers who do not embrace flexibility alongside remote working arrangements could hurt their company’s culture.
Even more, research by the Global Institute for Women’s Leadership at KCL and employee advisory firm Karian and Box revealed that companies should avoid presenting themselves as flexible, while expecting workers to put in long hours.
While a big portion of responding organizations said they plan to incorporate hybrid work in the future, only 36% said they are redesigning job roles to emphasize flexibility.
Flexibility is the essence of hybrid working, and the reason why it is becoming such a widely adopted trend. Without it, employees do not receive the targeted support they need to perform their best.
The King’s College survey of 254 organizations found that 90% of respondents said they supported working from home, and three-quarters stated they would be doing more to help enhance workplace flexibility.
“This is the moment to redesign work to tackle a range of problems holding back progress — from inflexible shift patterns for key workers, through to toxic, ‘always-on’ office cultures,” said Rosie Campbell, director of the Global Institute for Women’s Leadership. “Employers should focus on outputs, rather than physical presence, in performance evaluations, and embrace the opportunity to consider how and where work is done to produce the best outcomes.”
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Tenant Experience App Receives Big Funding
Cushman & Wakefield, JLL and several others have invested into Boston-based tenant experience app HqO.
The company revealed that it closed a $60 million Series C funding round, bringings its total funding to $106.9 million.
Founded in 2018, HqO is a software platform that provides landlords with the tools to manage tenant-related technology and amenities all in one place. It also features a tenant app, analytics tool and marketplace.
Chase Garbarino, cofounder of HqO, stated that this funding round and new partnerships with commercial real estate firms will help guide companies back to the office after a year of largely remote work.
Currently, the company manages over 150 million square feet and says it has tripled its revenue in the past 12 months. It will put the new funding towards expanding in its existing markets, as well as launching its services on the West Coast and in Toronto.
Medical Coworking Could Keep Occupancy Afloat
Companies are coming to terms with the fact that the workplace will never look the same. Remote working has become increasingly more desirable and attainable for many, leading to a dip in office space demand.
For companies who need office space moving forward, such as medical and wellness practices, the idea of signing a long-term, traditional lease feels risky. That’s why some are turning to coworking spaces as a solution.
Traditional coworking has long geared its services to entrepreneurs and business owners, but niche spaces have popped up in recent years and can help specific industries have a more flexible workplace.
For instance, in Houston where office buildings remain largely vacant, medical coworking space providers have become key tenants and are helping support occupancy rates.
Having space for private practitioners has been particularly important, as many have been displaced during the pandemic. Fortunately, medical coworking spaces have allowed these health professionals to continue serving their patients, without the financial and operational burden of managing a large office.
Not only is this arrangement ideal for private practitioners, office landlords also view this as an opportunity for them to keep tenants in their building once they have eventually outgrown the coworking space.
Tech Remains The Top Industry For Office Leasing
A report from CBRE finds that tech remained the most active industry in office leasing last year, despite an overall dip in activity, and will likely see a continuation of demand in 2021.
The Bay Area typically holds the top spot in tech office-leasing, but slipped in 2020 after Seattle leased a total of 3.4 million square feet to tech organizations.
Still, it is likely that 2020 is an outlier as the pandemic led companies to take a break from leasing activity, meaning the Bay Area could make a comeback this year.
There are indicators that companies are ready to bring their employees back into the office. For instance, Uber opened its new headquarters in Mission Bay with limited occupancy at the end of last month, while Google and Facebook announced their own reopening plans for this spring.
However, leasing in San Francisco remained relatively stagnant at the beginning of the year. According to Jesse Gundersheim, Director of Market Analytics at CoStar Group, the largest lease signed during the first quarter was by Goldman Sachs, which took up 88,000 square feet on California Street.
But Chris Roeder, Executive Managing Director at JLL, believes that there is a glimmer of hope in the Bay Area, particularly in terms of hiring.
“If you look at the top 25 largest public companies in the Bay Area — all of them hired a significant amount of employees during Covid,” said Roeder. “A lot of them had record hiring — very few of them have leased more space. But the hiring was a record.”Share this article