It’s often been theorised that the rollout of 5G systems and other technological advances will diminish the appeal of the traditional office.
Today, with most of us still working in the proptech sector (and in many other industries) now working from home, that trend has been rapidly accelerated.
Figures for 2018 showed that at that point, just under 5% of the UK’s workforce were working from home, up from 3% in 2008. Relatively speaking, that’s a 60% increase in a decade. Now in 2020, that figure is probably closer to 80% of those still employed. Almost all professional services are now working from home, bankers, lawyers, accountants, managers, software developers, analysts, directors, musicians, telesales, insurers, call centers and even the civil service are working from home. Anything that did not require a physical presence, and in a service driven economy that’s most of us, is now set up at home.
The offices of London, New York, Paris, Berlin, Madrid, Oslo, Rome, Washington DC, Boston, Los Angeles, San Francisco, Tel-Aviv, Moscow…the list goes on, are now empty, and many have been for weeks.
What does this mean for the future of residential real estate development and investment and what should firms be looking for now in order to provide the best possible product for clients who now will be considering their home not only as somewhere to sleep, but as somewhere to live, work and play?
From home people now access the cinema, live concerts of their favourite performers, they can order food delivery, watch (re-runs) of their favourite sports teams, they get up and go to work each morning with a minimal commute, argue with those they live with, do the dishes and everything else. Their homes have become their most used and most valuable spaces.
While many of these things are being done in a less desirable way, they are still being done, and now having proven that they can be done this way, they will continue to be done this way.
So what do people who work at home – whether owned, rented or BTR – actually need?
More space: A two bedroom 61 square meter apartment might be just fine when both inhabitants are spending most of their day somewhere else, but if they both have to work from home, that space runs out very quickly. If it isn’t possible to make the individual units larger, then it might be worth considering adding a communal workspace which can be charged to residents.
Outside space: Those who are stuck inside flats and houses today without outside space look enviously at their colleagues, friends and family who do have balconies, rooftops and gardens, and they’ll remember. Going forward people will put even more of a premium on having outside space, particularly private outside space. In the UK where the roofs of houses are traditionally pointed we don’t tend to make much use of rooftop space, however for flat roof buildings there is an opportunity to make good use of this space.
Kitchen and Ventilation: If a property is going to be occupied for work as well as for sleep and relaxation, then it needs to be able to be used more continuously. Single aspect units with poor ventilation will suffer and be discounted by the market as residents shun the idea of being stuck with their lunch smell all afternoon, similarly units which are not able to support dishwashers or large refrigerators will also be discounted as not sustainable in a work at home environment.
Clear Delivery Mapping: Many new developments, particularly larger groups of flats are poorly mapped and signposted. Delivery drivers and tenants become increasingly frustrated when their address is not easily identifiable and accessible. Developers and asset owners should consider how to make it easier for deliveries to find and access the building, without presenting a security risk.
Repairs: A burst pipe, electrical failure, gas leak, damp problem, broken window or any other of the maladies which can afflict a property are bad enough at home under normal circumstances. An electrical failure might be frustrating and annoying to return home to after a long day at work, but an electrical failure when your home is also your place of work is an even bigger problem. Speedy turnaround on repairs will be absolutely essential not just for building operators but for third party suppliers and contractors.
Sanitation: Excluding pandemics from the consideration, in an environment where work from home is more prevalent, bathrooms will be more frequently used. Higher quality more durable fittings will be sought, if not multiple private bathrooms in a unit.
Transportation: While the high degree of transmissibility of diseases on public transport may put the entire system into review, people will still need to get from their home/office to other places, either to a central work location from time to time, or just to meet with friends and colleagues. A likely beneficiary will be ride-sharing companies, and particularly whomever first succeeds in self driving cars. Pony.ai has already been successfully using their self driving cars in California to deliver packages and it hopefully won’t be long until that technology becomes more commercially prevalent.
For comparison; A monthly train from Reading to London Zones 1-6 costs £143.8 per week. A brand new Nissan Leaf on Uber’s hire-purchase costs £162/week.
So new developments may actually have to consider more parking, or more accessibility for cars coming in from other locations to pick up residents.
Considering all of the above we believe that in the near term people will tend to move more towards the suburbs than the center of cities. When they are not required to be in the office every day, or even at all, there is little requirement for them to be in close proximity to a center of employment. Without that requirement people’s preferences will lead them towards higher quality of life real estate solutions, suburban, connected communities and buildings which have a high degree of working operability to support them as tenants as they do more and more from home.
For those interested in more details on the shift to working from home have a look at GitLab’s recent report – https://about.gitlab.com/remote-work-report/. GitLab is one of the leading systems used by software developers globally and so is well versed in remote working.
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