A recent study indicates that forty-five percent of companies plan to move forward with a hybrid work model and seventy percent anticipate that a hybrid plan will be the new normal.. Employees expect their employers to be flexible; many have relocated or adjusted to their new lifestyle, and balk at being asked to return to the old way of doing things. In this increasingly tight labor market, employers should listen to the preferences of their employees, or they risk losing them. In fact, even most older professionals want to remain virtual: one study finds that only twelve percent of established office workers want to go back to all in-person work. And who can blame them? Time, money, and effort are saved on commuting, buying lunch, cleaning work clothes, childcare, and a host of other costs that accompany working in the office. For those with a longer commute, working from home is equivalent to a ten to twenty percent pay raise.
Virtual and hybrid work as the new normal has serious implications for commercial real estate, in cities in particular. The pandemic hit the retail sector hard. 2020 saw more than 12,000 store closures in urban areas. There are fewer customers around to buy a cup of coffee, grab a meal with a friend, meet a client for a drink, or sign up for a gym membership near the office. Less people working in person also leads to a decrease in the demand for office space, causing companies to consider leasing a smaller premises or relocating altogether.
The future may look dim for cities, especially since much of the workforce doesn’t want to return to the office; but companies contemplating downsizing or subleasing their office space may want to reconsider.
Not every group shares the WFH preference. A recent Generation Lab study finds that Gen Z, defined as individuals born between 1997 and 2012, exhibits a higher preference for returning to in-person work than their older counterparts. Forty percent of college students and recent grads prefer fully in-person work, thirty-nine percent want a hybrid system, and only nineteen percent prefer fully remote work (the remaining three percent have no preference). When asked what they will miss about a virtual future, seventy-four percent of young people cited the office community and forty-one percent said mentoring: they want to receive feedback in-person and get to know their superiors and peers on a face-to-face basis. Many young people meet their friends and even partners through work — relationships that are hard to forge in a virtual environment. Company events such as happy hours, ball games, or workshops are where newer, often young employees build their network, meet people, and establish a social routine in their new environment. A recent study even suggests that working from home can hurt an employee’s career path. Employees who are working in person — and getting more facetime with their boss — are getting promotions and pay raises at the expense of their virtual counterparts.
Working from home does not carry the same benefits for young people as it does for veteran employees. Older office workers know how the business works and have had years to build up their professional network and develop relationships with their coworkers. Being in person allows newer employees to ask questions more easily, collaborate, and adjust to corporate life. Gen Z isn’t worried about long commutes or childcare. Most individuals in this age group are single, centrally located, and looking to go out and interact. Furthermore, many young people often don’t live in a situation conducive to working from home. Often living with parents or roommates in a crowded space, it can be hard to find a quiet and private place to work. This translates to working at a desk in your bedroom with no separation between work and leisure.
We know now that most young people prefer to work in person. They want to go to the office, make friends, go out to lunch, attend networking events, and receive feedback face-to-face. It is reassuring for both those who love their casual chat by the water cooler and commercial real estate investors alike that the generation entering the labor force wants to work in person. The pandemic saw many articles contemplating “The Death of Cities” and whether the world would ever return to normal. The findings, however, from the Generation Lab study and other studies suggest that there isn’t as much to worry about as we once feared. The younger generation wants to go to the office, and managers and CEOs alike will have to provide for the sort of community and work environment that Gen Z desires.