How Work From Home Is Impacting Residential Real Estate

Real Estate

Many employers are now offering to accommodate hybrid work arrangements. This is already having an effect on commercial real estate as landlords are downsizing office spaces in response to tenant demand. This shift is also having a growing effect on residential rental spaces as well, as landlords begin to offer new and creative accommodations in an effort to keep current tenants and draw in new tenants.

One of the trends that was present prior to the COVID-19 pandemic was that individuals were moving away from urban centers in favor of the suburbs. According to Pew Research Center, the annual average of Americans leaving cities for suburban living prior to the pandemic was 5.4 million. Though this trend seems to have slowed during the pandemic, it shows no signs of reversing. According to that same article, “a new Pew Research Center survey finds that Americans are less likely than before the pandemic to want to live in cities – about one-in-five say this now, compared with roughly one-in-four in 2018.” This means that coming out of the pandemic, many people still located in major cities might be looking for a nearby suburb as a viable option for their living arrangements.

This has led some residential real estate owners to begin making some fairly creative changes to their rental units in an effort to raise the appeal of their space. With the shift to working from home, individuals are looking for dedicated, functional workspaces to accommodate their new needs. This allows them to “go to work” and be effective employees while eliminating the need for a commute.

Co-Working Spaces

Adding co-working spaces into common areas is a new trend that some residential landlords are putting into place. These spaces might resemble a lounge area or even a bank of cubicles. They can offer dedicated spaces for Zoom meetings or soundproof booths for important calls. The purpose is to give tenants, who will not be traveling into the office as often as before, a way to still be social, and have a real office feel, while staying very close to home.

Hybrid Apartment Layouts

While a co-working space might be appealing to some individuals, others prefer to work in peace and quiet. Adding better soundproofing and changing layouts has become more frequent as well. An available closet might now be converted into a small office space within a unit. A two-bedroom unit might even be sacrificed in order to create a one-bedroom unit and a dedicated workspace. Even a small area just outside of the main living area can be creatively reconfigured to be appealing as an office space. Having these spaces can be very appealing to tenants who are now working from home more regularly. Many of them won’t just want this space but will need it in order to be effective employees.

New Utilities

Landlords are beginning to include high-speed internet, or Wi-Fi, as an included utility. A landlord might even advertise that it has an on-call IT specialist to handle connection issues or other problems that might arise. This greatly increases the appeal when an individual knows that their ability to be effective for their company is dependent upon the availability of a secure, reliable internet connection.

Landlords could implement many more alterations in the years to come as the work from home trend continues to grow, and the new “at home” needs of tenants become more clear. As more people begin to transition to this hybrid model, changes in residential spaces will need to be more accommodating, just as the commercial real estate industry has needed to adjust. Being on the front end of these changes could provide a great opportunity to show current tenants, and future tenants, that their needs are a priority and that a space is the right space for them.

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For more information on this topic, please contact a member of Withum’s Real Estate Services Team.