This week several news sources focused on the challenges of post-COVID office environments with no easy answer. Human resource professionals are discussing issues beyond productivity, such as the challenges of re-socializing for their employees post COVID. Social distancing’s impact, anxiety, fears of new pandemics are among the issues facing a reunited work staff. The Wall Street Journal recently reported: Remote Work is the New Signing Bonus.
We talked last week about the impact of workers returning to the office on Center City’s MidTown condo market. Nationally, urban centers face an uncertain future with mixed results emerging since vaccinations have increased.
What will the post-COVID office be like?
The Economist cited Stanford University’s survey of human resource executives indicating we may not have the true picture of post-COVID offices until after Q3:
Across industries evidence suggests that people like the ability to work from home at least occasionally. A poll of 2,000 American adults by Prudential, an insurer, found that 87% of those who worked from home during the pandemic wanted to be able to continue doing so after restrictions ease. According to the same survey, 42% of remote workers said they would search for a new job if they were asked to return to the office full time. Only one in five American employees say they would seldom or never want to work from home (see chart 2). In a recent poll of more than 10,000 European office workers, 79% said they would back legislation prohibiting bosses from forcing people to work from the office.The Economist, June 28th
Hybrid Work Environment
CNBC predicts a hybrid working environment, most likely based on a 3 day work week in the office – Tuesday through Thursday, combined with working from home.
High-profile companies like Microsoft, Apple and Google say they will be using a hybrid work model, where workers spend time working both from the office and from home, going forward. And business leaders don’t seem to think that shift is temporary. In the LaSalle survey, 77% of respondents said they believe their workforce will use a hybrid model through next year.CNBC
The drive to get people back into offices is clashing with workers who’ve embraced remote work as the new normal.
A May survey of 1,000 U.S. adults showed that 39% would consider quitting if their employers weren’t flexible about remote work. The generational difference is clear: Among millennials and Gen Z, that figure was 49%, according to the poll by Morning Consult on behalf of Bloomberg News.
East Coast trends
In Manhattan, Mayor de Blassio has required municipal workers to return to the office, effective July 1st.
On Wall Street, JP Morgan Chase is the first US financial institution to require all workers return to the office by early July. CEO Dimon is sending a message to his fellow Wall Street chiefs: It’s time to bring employees back to the office.
In Center City, a few financial and law firms are requiring employees be vaccinated and work from the office.
Smaller companies and service industries such as high tech and real estate will likely implement the hybrid model trending among tech giants such as Google, as noted in CNBC’s article.
What does that mean for Center City real estate?
Condos in Center City’s cosmopolitan Rittenhouse Square have seen increasing demand in the under $600K price range shifting inventory levels from 12 months in December 2020 to 7.5 months in May. Buyer demand is largely coming from second home buyers, students and relocating executives who are not looking for a luxury purchase on Rittenhouse Square. The luxury Rittenhouse condo market remains mixed, and a challenge for traditional sellers.
Commercial real estate in Center City’s core financial district faces challenges keeping office space leased. Some leading firms have vacated their office space, paying the remaining lease penalties now rather than bring employees back to work. Landlords remain optimistic and commercial rental rates aren’t as soft as you would think. However, it is a prime time to negotiate and secure concessions.
Mid-Town Philly | Avenue of the Arts
The mid-town Philly real estate market faces the greatest challenges in post-COVID Center City, as I reported in last week’s blog article. In urban centers like Manhattan, Center City, Washington DC and Boston, the number of sales have increased overall but sales are still strongest outside the core, commercial areas;
Prices may have softened, but activity across urban core neighborhoods like the South End and Beacon Hill increased from 721 transactions through April of last year to 938 sales in the same timeframe this year, according to the Multiple Listing Service and LINK real estate databases.Boston.com report on condo sales
If a hybrid office dynamic with a short Tuesday through Thursday work week becomes a new standard, expectations of extreme traffic congestion may drive demand back towards Center City urban living.
A short work week will also negatively impact local businesses who count on office workers for their customer base.
What’s the answer?
From the studies cited above surveying human resource executives, answers regarding working from office, home or a hybrid combination may not be clear until 3rd or 4th quarter 2021.
What does that mean for you? Let’s chat about your goals and how we can create success in a changing market. Book a time at your convenience on my calendar.