The Future of Work

Return to office, collaborative technology, flex-spaces, rapid urbanization and the metaverse are some of the trends shaping the talk around the future of work in 2024 and beyond. In this edition of our newsletter, we delve into these trends and talk about how they will affect the future of work and commercial real estate.  

Return to Office

In the years immediately following the COVID-19 pandemic, there was widespread debate about how the new rapid growth in the remote work culture will affect the future of work with proponents of remote work expecting hybrid work models to dominate the space. 78% of workers worked remotely at least one day per week during the pandemic (2020-2021). As of 2023, this number stands at 40.9% - representing a rapid shift towards normalization in the work culture.

‍

Workers also value in-person interactions more and the majority believe that in-person meetings are more productive. In 2023, the number of meetings per week increased by 153% globally. 83% of employees spend 1/3 of the week in meetings and 59% believe that in-person meetings are more productive. 60% of employees fear proximity bias, where they believe that remote employees will be the first to be laid off – a fear exaggerated by the downsizing caused by the recession.

‍

After the onset of the pandemic, tech companies (Google, Meta, Twitter)  were the first to adopt fully remote working models. They are now enforcing strict return-to-office rules.

‍

Despite these shifts, employees are more comfortable when they have the option to work remotely. 98% want to work remotely at least some of the time. 30% of white-collar businesses in Australia use monitoring technology to determine the productivity of remote workers. A trend gaining traction globally but largely disliked by employees as it represents a lack of trust – and they are not afraid to voice their concerns. The anti-work movement is growing rapidly with online forums such as the subreddit r/anti-work gaining millions of followers within weeks.

‍

Employers need to navigate this space sensitively and provide options to employees where possible.

‍

Rapid Urbanization and Investment Trends

The UN projects that 68% of the global population will live in urban areas by 2050. As of today, this number sits at roughly 55%. This megatrend is causing a strain on the current infrastructure in several major cities with residents losing as many as 158 hours/year spent travelling during rush hour.

‍

20% of workers cite commute time as their primary reason for their WFH demands. Taken together, these trends are fueling the growth in the demand for flex-spaces and coworking spaces. Employees increasingly want to reduce their commute times but also feel distracted working from home offices, they want a solution that meets them midway (perhaps literally).

‍

What this means for commercial property (as an asset class) is yet to be fully factored into values due to the lagging nature of commercial property transactions. Our COO, Stuart Daun, said in a recent forum in Saudi Arabia that the days of blunt homogenous CRE valuation tools are long gone and we will see a growth of ‘building by building’ metrics to construct and value portfolios.

‍

There are large sums invested in CRE globally (in Australia alone the superannuation funds have $169 billion at the end of 2023 invested in this asset class) which has led some to speculate on pressure for large corporates from governments (property taxes are a consideration too) to return to the office and increase occupancy rates to limit damage to retirement funds. An alternative solution exists, however, where we see the transformation of these office spaces into flexible collaboration spaces to drive occupancy and efficient use of space.

‍

The Metaverse and Collaborative Tools

The metaverse seemed to be a buzzword for every tech media source during the pandemic. In his review of the year 2021, Bill Gates predicted that most virtual meetings would take place in the metaverse within 2-3 years.

‍

How true is this?

‍

The short answer is that it depends on who you ask. Some believe that the metaverse is already here and refers to embedding the real world into the digital world with technologies such as immersive virtual meeting rooms and digital twins facilitated by augmented reality tools. Others believe that in 5-10 years large-scale virtual worlds will complement the real world facilitated by high-performance hardware.

‍

Therefore, it is difficult to decide exactly where we are in the hype cycle for the metaverse. Initially, enthusiasts envisioned a parallel realm fueled by virtual reality, NFTs, and seamless connectivity. However, as the initial excitement fades, practical metaverse applications are emerging across various sectors like retail, healthcare, architecture, and design. The future of this space will be determined by key players such as Meta, Apple, and Microsoft.

‍

Moving Forward

The future of work is hotly debated. COVID was an accelerator to many pre-existing trends. For investors and commercial property owners, we at The Proptech Connection see significant volatility in commercial property usage and therefore values as these trends develop. Technology solutions become part of the fabric of any solution and for most leading companies are now regarded as non-negotiables before committing staff to a new environment.

‍