Working from Home Will Reduce Miles Driven and Affect Commercial Real Estate

covid-19 May 13, 2020

In previous posts I have stated that there is a very good chance mileage driven will go down due to more companies allowing their employees to work from home. 

Yesterday, Twitter CEO Jack Dorsey wrote in an email to employees that the company will allow almost everyone to work from home permanently. 

  • Dorsey had said he planned to make Twitter’s workforce more “distributed” before the coronavirus pandemic, but then...those plans got pushed up. 

Office closures have forced many companies to try remote working. Google said a majority of Googlers will WFH until 2021, and Facebook will allow all employees who are able to WFH to do so even after it reopens offices after the July 4 weekend. 

And it’s not just tech: The pandemic prompted members of the button-down brigade like Morgan Stanley and Barclays to add security measures that allow employees to WFH, to generally positive results. 

  • One report by NordVPN found that average workdays have stretched three hours longer since lockdowns began. Feel that. 

The real estate implications 

This could signal a turning point for a commercial real estate trend that’s been gaining steam for over 100 years. Since the late 19th century, a company without an office has been no company at all. But as the economic outlook gets bleaker, anxious execs could eagerly ditch leases while employees work from their breakfast nooks. 

  • Commercial real estate leases often last 10 years, and very few firms are currently in a position to make 10-year decisions. 
  • Google owner Alphabet has stopped real estate deals for over 2 million sq. ft. of new office space since the pandemic began, per Marker

For companies that do return to offices, the digs will look different. Staff might work alternate days and be herded by sensors and markings to enforce social distancing—and architects say the long-abandoned cubicle’s comeback has arrived. 

While miles driven will increase from the lows in April, it may take years to get back to where it was pre-COVID.

When it comes to real estate, it is typically slow to react to economic contractions, so we probably won’t see the peak of any office exodus until 2021 at least.

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