February 18, 2021

Coworking Spaces Will Rise Again — and 4 Other Post-COVID Workplace Trends to Watch

Through mass layoffs, furloughs, and work-from-home orders, COVID-19 changed everything we knew about working in the city. For the first time, employees no longer need to live within commuting distance of their offices, companies no longer need to lease massive office buildings, and primary cities no longer have the numbers they used to.

These trends will have a significant impact on the economy, population density, and the priorities of employees. People’s lives no longer revolve around the office, and cities and companies will need to shift to address people’s new needs — namely, health and safety. The businesses and cities that do adjust will be the ones to survive and even flourish in a post-pandemic society.

It is difficult to predict exactly what the long-term effects of COVID-19 will be, but these are the trends we expect to continue into 2021:

1. The Rise of Secondary Markets

Secondary cities like Sacramento, Nashville, and Salt Lake City will experience rising populations as people flee the big cities. These secondary markets offer a higher quality of life and a lower cost of living, making them increasingly appealing to individuals working remotely. Forbes reports spikes in the numbers of people moving out of large metropolitan areas, and it’s little wonder why. Housing tends to be significantly cheaper in the suburbs, and now that commutes are not the main concern, more people are comfortable leaving the city behind for good.

2. Hybrid Office Models and the Prioritization of Employee Health

The health and safety of employees will be a top priority going forward. As a result, more and more companies will embrace hybrid office models combining remote and in-office work. Gartner reports that 48 percent of employees will work remotely at least part of the time after COVID-19, compared to 30 percent before the pandemic.

Adjusting to the work-from-home mentality may have been a challenge initially, but many employees have come to thoroughly enjoy telecommuting. In a Global Workplace Analytics survey, 73 percent of North American respondents said they are just as successful when working remotely, and 86 percent said they feel “fully productive” working from their home offices. With remote work proving so efficient, it makes sense that 76 percent of respondents said they wanted to continue working from home at least some of the time in the future.

Large corporate skyscrapers were designed to fit as many businesses and employees as possible. Thousands upon thousands of people would open the same doors, touch the same elevator buttons, and greet each other in the lobbies. COVID-19 put all of that to an end — and with remote work proving to be so popular, the corporate office landscape may never look the same again.

Even those offices that do open up will have to prioritize employee health and safety in every aspect of office design. This may include installing new air filtration systems, hands-free elevator buttons, social distancing markers on the ground, and conducting mandatory temperature checks for anyone who enters the building. I predict that these precautions will become the standard going forward.

3. Coworking Industry Will Witness a Resurgence

While work-from-home orders hit the shared office industry hard, I predict it will bounce back stronger than ever. Post-COVID, many companies will opt out of their expensive, obligatory leases and invest in more flexible, collaborative spaces. In a survey of UK businesses from Flexioffices, 36 percent said they are looking to move away from their current cities, and 39 percent of those companies keen on making a move want more flexible contracts. Similarly, 69 percent of CEOs surveyed by KPMG said they were planning to downsize their offices.

At the beginning of the pandemic, many of us thought we would be returning to the office in a couple of months at most. As the lockdown wore on, companies pushed their return dates further and further back; some companies have even announced that remote work is now permanent and they will be getting rid of their offices. The pandemic has proven that many companies can operate efficiently without offices, and that means many organizations are opting out of next year’s lease.

But remote work is not for everyone. Many companies still need shared spaces to collaborate, discuss, and create. If the coworking industry can just hold out until COVID-19 blows over, it could be in for a dramatic recovery. Companies will need spaces for employees but will hesitate to sign anything permanent. Shared office space might be the solution many organizations are looking for in the coming months.

Check out the latest issue of Recruiter.com Magazine for more career advice and recruiting trends:

4. The Growth of Small Businesses

Within the shifting office landscape, small businesses will have a new opportunity to climb up the food chain and occupy prime real estate they never could have previously. Taking a risk and signing a lease during such an unpredictable time can have a great payoff for small businesses once the economy levels out.

Suburban office space in the New York area remains up for grabs. Leasing in Fairfield County, Connecticut, fell to a record low in the second quarter of 2020, dropping 50 percent from the first quarter if of the year, according to a CBRE report. The lack of demand led to a 25 percent increase in the availability of commercial space in the second quarter of 2020, and rent prices in the area are roughly half the average of rent prices in downtown Manhattan. This real estate market gives new businesses an opportunity to open up near more established firms that relocated away from the big cities to the suburbs, ultimately driving healthy competition between newly relocated companies and new businesses.

In this environment, I anticipate tenants will find it easier to sign shorter-term leases. There is an incentive to keep business moving forward and money circulating to stimulate growth. Reducing commitments gives tenants the options they desire while getting leasers the money they want, but it does put the entire system on edge and encourage short-notice decisions, which are major downsides.

The effort by some small businesses to grab prime real estate, like perfectly positioned downtown city center locations, comes down to a three-legged desire. First, the company wants to be seen as a leading authority, similar to the large corporations that would have normally bought the property. Second, the company wants to see itself as significant by making a move up the corporate ladder. Third, obtaining such real estate allows a small company to assert itself as a leader in its industry through the work it does and where that work is carried out.

5. The Rise of Microbusinesses

Microbusinesses — businesses with one or just a few employees — will proliferate as freelancers and contractors take advantage of a remote and flexible economy. Hiring individuals on a task-by-task basis through gig platforms is more popular than ever, and this trend will continue well into 2021.

According to Bloomberg, new business applications in the third quarter of 2020 were up 77 percent from the second quarter of the year and 82 percent from the third quarter of 2020. A significant number of these applications were for non-store retail small businesses, typically with less than three employees. We predict that such microbusinesses will be prominent in the corporate landscape well past the pandemic.

As things return to normal, some companies will choose to bring as many people back into their offices as they had prior to the pandemic. Since COVID-19 is temporary, these companies believe, so should be the work-from-home system the pandemic forced us to adopt. Employees who no longer feel tied to the corporate environment — and have already proven they could maintain productivity from their homes — may take this opportunity to strike out on their own. Rather than returning to the office, these workers will start their own businesses, or at the very least jump to companies that allow them to continue working from home.

Ryan Swehla is cofounder of Graceada Partners.

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As principal and cofounder at Graceada Partners, Ryan Swehla provides strategic direction and oversees capital sourcing for Graceada Partners' $500 million portfolio. Ryan has over 15 years of experience in commercial real estate and capital markets. Prior to cofounding Graceada Partners, Ryan worked for two capital management firms for a combined four years. In 2009, Ryan cofounded Graceada Partners, an investment manager specializing in value-add real estate investment in California's fastest growing region, the Central Valley. Today Ryan and his partner Joe Muratore continue to focus on building a world-class investment company that achieves exceptional risk-adjusted returns. Ryan has been featured as an expert on commercial real estate investing in Institutional Real Estate Magazine, Forbes, ConnectCRE, Commercial Property Executive, Canadian Property Valuation, Quartz, Epoch Times, and other publications.
https://www.graceadapartners.com/