Have you and your company spent the last several months working from home?
The rapidly changing set of circumstances that we have all been operating in over the past few months forced businesses to adapt and evolve in order to survive and continue bringing in revenue.
One of the first things implemented is working from home. According to Global Workplace Analytics, only 3.6% of the population worked from home before the pandemic. That number is expected to skyrocket to north of 30% by the end of 2021.
Although many industries find it necessary to have employees there in person, there are numerous savings and benefits that business owners are finding that outweigh the costs and negatives of working from home.
Real Estate Cost Savings
With a reduced number of employees coming into the office, the need for expansive open-concept offices plummets drastically.
The shift from large workspaces buzzing with activity to employees breaking off into small teams via video conferences is going to be felt in the commercial real estate world. Commercial property owners are going to have a different kind of tenant, and owner-users are going to slowly phase out of their larger holdings into smaller leases and smaller satellite offices that serve as public-facing offices for necessary meetings and in-person interactions.
Now is the time to sell an office building or large single tenant space before the transition completely takes place and the value of these buildings hinges on being repurposed for multi-tenant use.
If there is an opportunity to jump on a property that is superbly positioned for becoming a multi-tenant or co-working space, it is also a great time to leap on those opportunities and be one of the first to market with what businesses actually need.
The savings seen by employers and employees alike are significant. No more daily commutes for employees, and fewer cross country flights paid for by employers.
Currently, it is estimated that an average of $11,000 in savings is realized per employee that is allowed to work from home half of their workdays. In a small business that employs 50 people, that is $550,000 in annual savings that going directly to the bottom line and help that business keep their doors open and reinvest in themselves and become an even more robust company for their stakeholders and employees.
As telecommuting becomes the new norm, there are going to be employees who simply are not willing to work in the new digital environment or do not want to put in the effort to adjust. We will see these individuals continue working in physical offices for the next several years and as they retire and the younger generations begin filling their roles, see an even larger digital workplace presence globally.
Alternatively, there will be industries that simply will not be able to survive if they continue to have to pay for a physical location, and will no longer be able to afford to employ individuals unable or unwilling to adapt to the new working normal.
The reduced costs on both employer and employee can be seen in payroll, as well. By eliminating daily commutes, a large expense that all employees are footing the bill for will be eliminated overnight.
Employees will also not be restricted to living in CBDs or larger suburbs closer to urban areas where the cost of living is higher, meaning that if they so choose to they could live in a more rural area with a low cost of living as long as they have reliable and fast internet.
The combination of savings on both sides would lend to the belief that employers could reduce overall payroll expenses without impacting employee quality of life since their cost of living and overall expenses would be significantly reduced as well.
Not only is this optional, but employee pay could potentially be increased if productivity really does prove to be improved when working from home. A portion of the cost savings and increased revenue could be passed along to the employees.
Overall, the cost savings and potential for increased efficiencies that come from having employees work from home could prove to be beneficial in the long run and something that we see stick around far after shelter at home orders are lifted.
Matt Moreland, Realtor® is a real estate agent serving the Lubbock, Texas, and the South Plains. After graduating with a Bachelor of Business Administration in Finance with a concentration in real estate from Texas Tech University, he began practicing real estate full time at McDougal Realtors in Lubbock, Texas. Matt enjoys spending time with his wife and their dog. Some of his hobbies include investing in real estate, elk hunting, backpacking, barbecuing, and playing guitar. To schedule a commitment-free consultation please call 469-744-3610 or fill out this form to get started.