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 became prevalent during the COVID-19 pandemic was that individuals working in jobs that could be performed remotely took the opportunity to work from home most of the time. An article from the Pew Research Centerstates, “…about a third (35%) of workers with jobs that can be done remotely are working from home all of the time, according to a new Pew Research Center survey. This is down from 43% in January 2022 and 55% in October 2020 – but up from only 7% before the pandemic.” Although that percentage has been trending down since the pandemic, there is still a notable increase from pre-pandemic. The same article notes that the percentage of employees that moved to a hybrid work model has increased from 35% in January of 2022 to 41% in March of 2023. This means that approximately 76% of employees who can work remotely need to have some form of professional workspace available within their living space.

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 within living spaces 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 clearer. 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.