For the past six months, working from home has become a permanent trend during this pandemic. Ultimately, we will all return to our workspaces and the number of people will match up to what we had pre-COVID. The question remains as to when things will finally return to normal. According to a news forecast from Cushman & Wakefield, it could take five years.
Global office vacancies aren’t projected to return to their pre-Covid peak level until 2025, resulting in the loss of 215 million square feet of office vacancy due to the pandemic. Between the start of COVID-19 in the United States and 2021, the net-negative office square feet damage will reach approximately 95 million square feet, topping the financial crisis trough by 10 million square feet.
During the financial crisis, Canada, Europe, and the U.S. reported a combined decline of 120.5 million square feet occupancy from peak-to-trough. This evidence proves that the situation will most likely be worse in the west.
The work from home trend is present in most companies operating through the pandemic. Cushman & Wakefield studied some of the most extensive companies around the world about the future of the office and ventured to weigh both the cyclical results of the Covid recession and structural impacts regarding a tremendous increase in work from home. Two key verdicts arose from this study; Office leasings fundamentals will be significantly impacted, and vacancies will increase to an all-time high. Secondly, the office real estate market will fully recover immensely due to employment growth and the continuous shift in the U.S. economy’s concentration in certain types of professional jobs.
An estimated 82% of the damage in real estate firms will be related to cyclical factors such as permanent job losses and the growth of coworking. The other 18% is due to structural factors like assumptions about permanent remote workers and hybrid workers. Work from home will double, and those who are working both from home and at the office (hybrid) will increase. “The study estimates that the share of people working permanently from home in the U.S. and Europe will increase from roughly 5-6% pre-Covid-19 to between 10% and 11% post-Covid, while the share of hybrid — also referred to as agile workers — will increase from between 32% to 36% to just under half of all workers (Para 8).
Levi Strauss & Co recently shut down any new commercial real estate during the crisis. The CFO states, “The myth that work from home is not productive has been busted.” The CFO believes that society will eventually settle into a culture where working from anywhere will be the new norm. As for Google, they will be trying out a hybrid plan of work since most employees don’t want to be in the office every day. Young workers are taking advantage of the remote working shift to travel, embracing a new lifestyle full of voyage and technology. This is a transformation that could become permanent for a new generation of workers.
Many workers still do not feel comfortable returning to their offices. After one study, only 14% of workers claimed they felt trusting enough of their CEOs and managers to safely lead them back to work. As for now, working from home is the new norm for our society.
This blog post was written by Krista Pham, our intern.
The article that inspired this piece can be found, here.