Home prices have risen dramatically since the recession, especially in the areas proximate to the downtown Central Business District. A three-bedroom, two-bathroom townhome that was selling for $350,000 three years ago is now selling for $550,000. The cost of building materials has increased dramatically as well. The demand in the housing market is still strong for millennial home buyers and baby boomer retirees. The increases in land prices and building material costs have pushed builders to build homes outside the suburbs. The Covid-19 pandemic has proved that, while some people are more productive working in an office, others can work effectively from the comforts of home. More people prefer to have the flexibility to work in a formal business office or from a home office as circumstances require. They can meet their clients at the business office and work extra hours at their home office.
This dramatic change to hybrid work arrangements between a business office and home office may lead some businesses to rethink their office space requirements in the future. According to Adam Segal, CEO of Cove, a commercial real estate technology and service platform, a business or professional firm might reconfigure its office spaces in the future instead of gathering everyone together in a large and costly downtown office building filled with hundreds of desks. Even before the pandemic, some businesses were reconfiguring their real estate offices to have the main office downtown and branch offices in other locations. Many large banks have headquarters in the downtown areas and branch offices in the other areas. Some franchise chain stores set up their stores everywhere and keep a head office in a lower-cost location.
This hybrid office space setting will provide better service in different communities. It also satisfies peoples’ need for a little larger house in the suburb areas. For example, some companies may have their head office in the Orlando downtown area; however, there may be a branch office in the Sanford or St. Cloud area. Instead of the traditional large office in the CBD area, it may have 3 medium-sized offices in downtown, Sanford, and St. Cloud. Some workers may live closer to these areas, and it saves their driving time and provides efficient service in these areas.
New technologies make these hybrid office space settings and other remote working arrangements possible. Millennials welcome these trends. They have the technical skills to work remotely and love the flexibility of meeting their clients at the office when needed and working from their home office at any time to suit their lifestyle. This trend to hybrid office arrangements should end up reducing some companies’ office space requirements and costs. If they need a large space for an occasional meeting or conference, they can just temporarily lease space from hotels, churches, convention centers, or community centers.
Adam Segal said that businesses need to think about how to create hybrid workspaces that attract talent and support their needs. These hybrid workspaces are more compatible with the Millennial and Generation X lifestyles. With a population of approximately 72.1 million, Millennials are currently the largest generation in the U.S., outnumbering Baby Boomers (71.6 million) and Generation X (65.2 million). Generation X is projected to pass the Baby Boomers in population by 2028. As more and more Baby Boomers exit the workforce, it becomes more and more important to rethink and reconfigure the working environment to meet the needs of these generations.