Post Pandemic increase in Remote Working and Learning.
1. Greater remote working and remote learning is one of the more obvious consequences of the pandemic
2. Like most of the other trends, it was on the upswing pre-pandemic but will accelerate post pandemic. Upwork’s “Future Workforce Report” predicts that 73% of all teams will have remote workers by 2028 and 75% of current teleworkers say they plan to work remotely for the rest of their career
3. Technology tools like Zoom and Team plus stronger data security means that remote working / learning is here to stay
4. Remote learning is no longer an inferior option to in person classes. It has been legitimized
5. Rising remote work may disproportionately benefit higher income earners. Rising remote learning may disproportionately benefit lower income earners
6. In terms of real estate, it would of course vary by geography but generally speaking, it has been fundamentally impaired -
6.1 Retail space may continue to decline as shopping moves online
6.2 Industrial space will continue to grow as ecommerce requires up to three times as much warehouse space on average than traditional brick-and-mortar retailers
6.3 Office space may decline in some cities due to remote working plus economic contraction.
6.4 Coworking spaces / service offices with pre-existing problems (ie those that were unprofitable) will struggle
6.5 Residential may be impacted in some areas. In a February 2020 report from Zillow, more than half of home buyers who work remotely say remote work influenced a major home change, whether that’s moving to a different house (28%) or to a different location (24%).
Perhaps the most obvious impact of the Pandemic is the push towards remote working. But again, like everything else mentioned in this book, this is also not new.
Some 74% of respondents in a 2018 survey in the US believe that flexible working has become the “new normal.”
Working outside of their company’s main location and having a choice of work environment is now a key factor for many job seekers when evaluating new career opportunities.
In the span of one year, from 2016 to 2017, remote work grew 7.9%. Over the last five years, it grew 44% and over the previous 10 years, it grew 91%.
Between 2005 to 2017, there was a 159% increase in remote work. In 2015, 3.9 million U.S. workers were working remotely. Today that number is at 4.7 million, or 3.4% of the population.
What’s driving this trend?
- Explosion of collaboration and productivity tech. Cloud-based technologies like Zoom, Slack, and JIRA are helping enable the communication — both synchronous and asynchronous, written and verbal — required to work remotely.
- Workers increasingly demand flexibility.
- Companies are global from day one. The Internet has opened the door for companies to hire talent all over the world, not just within close proximity of their offices.
- Workplaces optimizing for productivity, not presence.
Remote Work Is More Prevalent in Certain Areas
However, do consider that remote work is and will continue to be more common with knowledge workers who are typically paid higher salaries, such as software engineering and marketing. Regardless, for those sectors where can be deployed, it widely believed that -
- Remote Work Attracts and Retains Talent
- Remote Work can be good for Productivity
- Remote Work Increases Job Satisfaction
- Remote Workers take fewer sick days
- Remote Work Is Environmentally Friendly given the reduction in commutes.
Remote Work Is Here to Stay
Despite the limited scope of remote working, Upwork’s “Future Workforce Report” predicts that 73% of all teams will have remote workers by 2028 and 75% of current teleworkers say they plan to work remotely for the rest of their career
But there is nothing new here. We all knew this but there are serious implications as remote working and remote learning increases. Let us explore some of these.
Commercial Real Estate
Among the sectors impacts implications is real estate. Of course real estate markets vary widely depending on geography. But in many developed urban markets, there are those who would argue that real estate as an asset class is now fundamentally impaired due to technology. In the commercial sector, ecommerce will continue to shape the retail market for years. Before the pandemic, estimates were that 12.4 % of total US retail sales come from ecommerce, but that number is expected to grow significantly as ecommerce will shape the retail market.
Industrial will continue thrive as with more online shopping, demand and pricing for warehouse space will only surge even more. Estimates are that ecommerce requires up to three times as much warehouse space on average than traditional brick-and-mortar retailers with the average consumer product like toothpaste being stored in four or more distribution warehouses from point of manufacture to point of retail consumption. Additionally, as consumers’ expectations accelerate to same-day fulfillment—and even one-hour delivery—many industrial tenants are sourcing smaller distribution sites in more densely populated locations. Not to mention the reverse logistics aspect of ecommerce as retailers need facilities to process returns which adds to overall demand.
Last-mile delivery that is close to the end user means they are constantly looking for space that is closer to the end user, so companies are increasing reliance on last-mile distribution centers near population centers. This last-mile focus is driving Amazon and other retailers to seek additional warehouse space near large cities to facilitate quicker and more efficient distribution to customers. It is estimated that Amazon already has centers located within 20 miles of half the population in the U.S.
But what about office space? When the Great Recession hit back in 2008, many US companies downsized their office space to save money and began allowing, or even encouraging, employees to work from home. What was born from necessity stuck around long after the economy rebounded. It is natural to expect the decline to continue in the post pandemic world.
Based on this trend, many have been betting on co-working spaces and serviced offices. Although people typically associate coworking with freelancers and startups, Fortune 500 and enterprise companies such as Salesforce, Microsoft, UBS, and others also utilize coworking spaces. It makes sense. They’re essentially beautiful office space, plus amenities, plus community all included in a turnkey package.
Around mid-2019, global coworking giant WeWork boasted 425 locations in 100 cities as it headed for a buzzy IPO with a valuation of $47 billion filed in an S-1 by its larger-than-life cofounder and CEO, Adam Neumann. But then there was that little IPO failure. The one that made international news; resulted in the exit of Neumann (who jumped with a $1.7 billion parachute from his role as chairperson of the board); dominoed into layoffs of 2,400 employees by late November; and left lots and lots of not-so-glowing articles, blog posts, and industry distaste in its wake.
After WeWork’s fall from grace, some have asked if coworking dead. In some geographies, it is definitely struggling but others are going strong.
Residential Real Estate
In a February 2020 report from Zillow, more than half of home buyers who work remotely say remote work influenced a major home change, whether that’s moving to a different house (28%) or to a different location (24%).
Additionally, 30% of home buyers indicated that a commute between 15 and 29 minutes was their max. And only 12% of home buyers said they were willing to commute an hour or more.
Furthermore, 62% of Gen Z and millennial home buyers work remotely at least one day per week. Remote work gives the workforce’s two youngest generations, who are often burdened with student debt, more options with where they live, reducing the necessity to live near large metropolitan city centers in order to maximize career potential.
So for urban spaces that are overly dependent on workers from sectors benefiting from remote work, it is not unreasonable to expect that certain residential developments would be impacted.
Learning and Development
Educational institutions across the globe have been impacted by the pandemic. In response, school administrators and teachers have been converting in-person curriculum into online courses.
Online education has seen exponential growth in recent years. From 2008 to 2017, the percentage of undergraduates enrolled in the U.S. in at least one distance education class expanded from 20-32% of all enrollments, according to the Institute of Education Sciences. Often students are the pioneers in new technology adoption, setting the pace for other vertical industries. Educational institutions have been an avid adopter of advanced synchronous and asynchronous communications for online learning. Rapid consumerization, the impact of social media, and the growing popularity of flipped classrooms and blended learning have led to the increasing use of technology in education.
Video conferencing-based remote learning keeps students engaged with features like whiteboarding, annotation, group chat, breakout rooms, attention tracking, etc. Many K-12 schools have been avid users of Google Classroom, the online platform that allows teachers to post videos and assignments.
Many universities are already leveraging video conferencing as a key part of their educational toolset. Arizona State University is one of the largest universities in the US. Like most American universities, they switched to remote teaching and in the second week of March 2020, held 170 classes with 7,000 students using Zoom. Similarly, the University of Bologna, Italy, which has an enrollment of over 80,000 students, switched 90% of its courses to online using Microsoft Teams to run virtual classes within 3-4 days after the Italian government closed the doors.
This isn’t the first time that the video conferencing industry has seen a spike in demand. In years past, events such as Sept. 11 and the SARS outbreak have prompted businesses to use video meetings in lieu of travel. However, past surges failed to leave a lasting impact on the industry. Frost & Sullivan research shows that only 6% of all meeting rooms globally are video conferencing enabled. The scale of the disruptions caused by COVID-19, however, is truly unprecedented and is expected to fundamentally change user behavior towards remote work and online education.
Part of what makes this crisis different is the technology that is enabling the response. Previous generations of video conferencing technology were complex, clunky, and costly to operate. Modern video meetings are simple to deploy, easy to use, and affordable for businesses of all sizes. However, the stickiness this time goes beyond technology considerations and touches upon human nature – the one constant that impacts adoption more than any other factor.
In recent research, Frost & Sullivan has pointed at the growing future of work trends such as the rise in distributed, dynamic, and on-demand work enabled by next-gen cloud and software delivery. COVID-19 will accelerate the need for flexible and agile work styles and further push the adoption of technologies that improve work-life balance.