The Great Resignation and its Impact on the Real Estate and Construction Industries
January 26, 2022
By Kara Tegze
In the past decade, the number of American workers leaving their jobs for opportunities at other companies, to work for themselves, or because they’ve decided just not to work at all has been slowly rising. This trend was expedited with the COVID-19 pandemic that began in March 2020, and has now been coined as “The Great Resignation.”
The Great Resignation is a phenomenon based on the record high numbers of people leaving their jobs during the COVID-19 pandemic. Most recently, according to the U.S. Bureau of Labor Statistics, 4.5 million Americans quit their jobs in November 2021, whether for another job or just left the workforce entirely, which is the highest number ever recorded in history, according to the Bureau of Labor.
The number of employees who work in the real estate and construction industries who quit their jobs in November 2021 totaled approximately 59,000 and 207,000 employees, respectfully, representing approximately 2.5% and 2.7% of each industry’s respective workforce.
Americans Are Moving
Throughout the COVID-19 pandemic, many Americans experienced working in remote environments for extended periods of time. As a result, many workers now desire to remain in this remote environment indefinitely. Thus, American workers do not feel as tethered to one place as they can work wherever they so choose, including the comfort of their own home.
This shift in flexibility has led to many Americans moving to more favorable cost-of-living locations. According to the latest survey from Coldwell Banker Real Estate LLC, 41% of Americans would be willing to accept a new job with a lower salary to be able to move to a more affordable location. The top two cities young Americans aged 18-34 are relocating to are Miami, Florida and Austin, Texas.
One item that has affected every industry, including real estate and construction, is the shift in employee mindsets, which has morphed the Great Resignation into the “Great Reset," as posited by Realcomm. The concept of company loyalty is becoming something of the past, and employees are choosing to focus on personal loyalty.
Employees are now focusing on more than just compensation when they are looking at their careers, and instead are wanting schedules and workplace accommodations that are more flexible to personal needs. Workplace accommodations include culture, values, and goals that align with their personal goals, and having flexibility in their work to support their wellbeing. Employees want jobs that promote a culture where they can learn, grow, be challenged, have a sense of belonging and share their value with leaders who listen and ‘walk the talk.’ This shift in mindset is driving more companies, including real estate and construction companies, to change their workplace strategies to retain and attract employees.
Real Estate Occupancy
A result of employers adapting to employee’s workplace accommodation needs is shifting office spaces to align with those needs. As employees are being given the opportunity to work from home more, the individual desk concept is becoming something of the past and offices are being modified with shared spaces. These changes are causing companies to need less office space and are causing the owners of office spaces to have to offer co-working and flex space accommodations. Leaders in the commercial real estate industry are learning to become experts in managing these properties to market them to businesses. In a recent study by JLL, they estimated that by the end of this decade, 30% of all office space will be flex space to help companies better match space consumption.
According to a study by the Statista Research Department, office vacancy rates in the United States have increased from an average of 10% in 2019 to approximately 15% in 2021. Included in the statistic above are vacancies related to the retail industry with levels of shopping decreasing due to the pandemic, resulting in permanent closures and a large increase in retail vacancies. The increase of office vacancy rates is causing decreased revenues by real estate and construction companies as many businesses are not looking, nor able, to buy or lease out new spaces.
As The Great Resignation continues, real estate and construction companies will need to adjust to handle the impacts that have come from this phenomenon to maintain their places in the industry and retain employees.