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New Office Trends Are Changing The Real Estate Landscape


Emerging business trends are rapidly altering the office market. These shifts will quickly spill over into other commercial property sectors and residential real estate. So what is changing? Why is it so important for those investing in real estate to be on top of these changes?

Contrary to the opinion of many individuals out there, what is happening on a macro industry level and within the office sector has a direct impact on everyone. The chain reactions of these trends will not only impact retail and hospitality, but ultimately every homeowner and even renters. Staying tuned into office trends and business changes helps to identify what’s hot and what’s not, where the best investment opportunities are, the best property improvements to make, and indicate when the most profitable moments to buy and sell real estate will be.

Developing Office Property Trends to Watch:

Remote Working

As of the end of 2013, the U.S. led the world with over 700 co-working spaces. This trend is no longer just for independent professionals and start-ups either. A recent survey showed that 92% of commercial real estate firms have been outsourcing at least some of their work. At least 40% of the workforce is expected to be working remotely by 2017.

Smaller Office Foot Prints

A CCIM Institute report shows government, banking and legal tenants shrinking their office footprint by an average of 15%. Not only are many firms reducing the number of in-house employees they have, but storage space is now migrating to the cloud, and the square footage per employee is shrinking too. The one exception here might be Yahoo! Of course we can only speculate, but it appears pretty obvious that a company with far more in static overhead than the competition, and which is not already in the strongest market position will be at a serious disadvantage going forward.

Corporate Housing

Corporate housing is expected to make a significant come back. It will go way beyond what we saw during the last upward cycle with more local units being used for corporate housing and big firms launching their own brand of housing, like Facebook.

Corporate Real Estate Investing

Even though companies may be shedding their personal office space, they recognize just how much more important property holdings are now. With regular sources of income tight and profit margins shrinking, while real estate values and rents are going up, much of their future revenues and balances sheets could be made up of real estate investments and leased property.

Workplace Culture

Workplace culture continues to be a buzz-worthy topic and crucial for businesses to attract and retain talent. This war will only heat up and see companies battle for the best designs.

Relocation

Between salary and living cost concerns, being positioned in larger talent pools, desiring to reduce costs, and increase profit potential from real estate holdings corporate America will continue to shift. It is shifting to new hubs, less expensive ones and lifting local real estate with it. They are looking for healthy and green spaces, layouts more enjoyable for working and can make staff more productive, while being powered by high speed internet.

In Summary

This is all important to know if you are investing in commercial and residential real estate, or just thinking about buying or selling a home. These trends will open up new opportunities in gateway cities, but also help lift property values in previously more suburban areas. Still, it is important for investors, buyers and sellers to recognize the changing tastes of buyers and tenants including need for services, home office space, “walkability,” a more transient population and the impact of rising rents.

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