Like the other real estate markets, Ali Ata believes that the COVID-19 pandemic significantly affected the office real estate market. Office vacancies reached an all-time high as the government enforced social distancing and stay-at-home protocols. Although there is a large possibility that remote work may become a permanent trend, employees will have to return to their offices at some point.
A real estate firm estimated that 82% of the damage brought by the COVID-19 pandemic relates to cyclical factors such as permanent office job losses and the rise of coworking. The remaining 18% relates to structural elements, such as assumptions about permanent remote workers and hybrid workers.
Ali Ata believes that the number of hybrid workers will increase as work from home increases. A study estimated that the number of people working permanently from home would increase from roughly 5% to 11%. It also estimated that the number of people who work from home sometimes would increase from 32% to just under half of all workers in the U.S.
As many firms bust the myth that a work-from-home setting is not as productive as an office setting, Ali Ata believes that more will settle into a culture where working from anywhere will be the new normal setting. Many young employees are now taking advantage of remote working to travel and shift to a digital nomadic lifestyle.
Ali Ata believes that as long as many workers do not feel safe to return to the office, there will be significant challenges for the office real estate market. A study found out that only 14% of employees say that they trust their CEOs and senior managers to lead them back to work safely. Reports also show that the global office vacancy will increase from 10.9% pre-COVID to 15.6% by the second quarter of 2022.
But there is hope for the office market. Although all these facts show that the number of permanent remote workers and hybrid workers will increase over time, Ali Ata believes that population and economic growth, and concentration in knowledge-based work, will lead the office real estate market to a full recovery.
A study attempted to measure cyclical and structural impacts of the COVID recession, assuming increased work from home. Results showed that although there are significant adverse impacts, the office real estate market will fully recover. Thie recovery is primarily because of employment growth and the ongoing shift in the U.S. economy’s focus on certain types of professional jobs.