The Azucena Take: The Future of Office Space
Coming to the office or working from home has become a hot topic debate among professionals. Any time the topic is discussed on LinkedIn, the comment section becomes almost too toxic for a civilized discussion. Those who want to return miss the social environment and being with people. Those who prefer working from home don’t want to waste 2 hours of their day in traffic or be stressed before the day starts.
Even companies are having a debate over the future of work from home. Many financial institutions are trying to bring their employees back to the office. Meanwhile, tech companies are making work from home permanent or leaning towards a hybrid model to keep their talent.
A survey of small businesses by Digtial.com found that even though a good number want to bring employees back to the office, there is also a good demand for working at home. Some will adopt it permanently while other businesses will embrace a hybrid model or give employees the choice. Here is the breakdown:
39% want to bring the staff to the office.
20% want to give employees a choice.
17% want to adopt a hybrid model.
14% of employers are not sure.
10% are making work from home full time.
As the debate continues, investors are wondering if they should hold their interests in major cities or move to other markets. When a company has a major presence in a community, it creates an economic boom for the surrounding housing and retail markets.
Take how Cupertino has completely changed in the last 50 years thanks to Apple. It was once a community mostly dominated by agriculture and a limestone quarry. That all changed when Apple established its Infinite Loop campus and completely transformed the community. Prior to the pandemic, it had one of the hottest housing markets and the top-performing schools. When Apple Park was completed in 2017, it brought with it a complete transformation of the surrounding area.
However, working from home has completely transformed the real estate landscape. It accelerated the growing migration from major metropolitan areas to mid-sized and smaller communities. As a result, investors started to divert their interest into the secondary/tertiary markets (metro areas with a population of fewer than 1 million people).
So, what should an investor do?
The obvious is don’t completely pull out of major cities as metropolitans like New York or San Francisco have been centers of culture and commerce. People are migrating to second and third-tier markets, but they are also flocking to the major cities. Meanwhile, the future of the office is still being debated.
Most likely, companies will either give employees a choice or adopt a hybrid model. The best an investor should do is study the current trends and not go all in for one market.