Real Estate Impact of Remote Workers
January 18, 2023
Amy Menist joins Tim Schuster on The Bottom Line podcast, where they discuss the top trends in real estate due to the rise in remote workers. This podcast also discusses what employees and employers should consider regarding purchasing versus renting real estate.
Amy, would you mind giving the listeners a little background on yourself?
AM:Sure. My name is Amy Menist, and as Tim said, I'm a senior auditor with EisnerAmper's Real Estate Group. I came to the firm with about 10 years of accounting experience, serving both public and private real estate and construction companies.
TS:Amy, that's fantastic and awesome, and we're glad to have you aboard with the team here. What are some employers considerations with the rise of remote workers?
AM:Okay, so the trend for remote work options isn't expected to end anytime soon. Companies today now realize that the work can be performed remotely, and that it's actually decreasing their operating costs. They're using less electricity, less office supplies, purchasing less furniture and equipment, thus ultimately increasing the business's profits. For example, global workplace analytics statistics reveal that IBM actually saved about $50 million in real estate costs alone by allowing remote workers. Additionally, remote positions decrease stress and empower employees with more flexibility and a greater work-life balance. It decreases time and money spent commuting, allowing for more time for family and leisurely travel, thus keeping employees happy and creating a greater retention rate, which further benefits the company.
There is still a debate, however, about productivity in employees in office versus remote settings. However, two-plus years into the pandemic, research has shown that remote workers are generally more productive than employees who work in an office setting. This is because employees have the ability to set their own work schedule, allowing them to work during the hours that they are most productive, and limits distractions from other coworkers.
Lastly, I would strongly encourage companies that are reluctant to hiring employees on a hybrid or remote basis to consider Pro Unlimited's labor market report. This study showed that employers that offer remote work options will capture 96% of the labor market, while those employers that don't offer remote or hybrid work options will actually lose out on about 58% of candidates today, thus significantly decreasing the talent pool and the company's ability to hire qualified candidates. Additionally, companies that do offer fully remote work options can source the best talent from anywhere. Remote work options today take away location limitations, which increase the company's chances of finding the perfect candidate.
TS:Wow Amy, these are really a lot of things for employers to be considering. Now, let's flip the script a little bit. What should remote workers consider when they're thinking of relocating to a new location?
AM:Sure. For the employees that are fully remote opposed to a hybrid basis and that are looking to relocate, prior to moving to a new location, I would encourage that they consider a few different factors. One being the company branch or department that they're working for and reporting to. Such as, is there a difference in time zones? Do they truly understand their work expectations and responsibilities? Who would they be reporting to and how? Another factor employees should consider is making sure that they're properly set up to actually complete their work. Do they have a designated workspace? Does the company offer reimbursement for office expenses? Will they create a work schedule for themselves? How will they make themselves available and accessible to their colleagues? Could it possibly be harder for them to network in the new location?
Lastly, if not most important, is remote employees should also consider the financial implications. Such as the cost of living in the new location, or could there be any tax implications if the company is located in a different state from where you're resigning? Working remotely in a new location could be thrilling, but it requires some additional planning, communication amongst one's company and team, and a proper schedule for work-life balance to set oneself up for success.
TS:It's fascinating to think about this from an employee's perspective. As people are considering relocating, going to different locations, renting or purchasing comes up in conversation. In another podcast series, I discussed this in detail with my own journey, essentially transferring and locating to a different location. Amy, out of curiosity, what do you think? Do think renting or purchasing may make more sense?
AM:Well, I think that that depends on the person and on the situation. I mean, for instance, is the remote work that someone is hired to perform, is that on a short-term contract basis or is that on a long-term permanent basis? I mean, there are pros and cons to both renting or buying, but of course I wouldn't recommend buying a home before visiting an area.
AM:Yeah, I might even recommend renting in a town first so that you could determine what you like or don't like, or determine what it is that you're truly looking for. But again, that's a personal and situational decision. However, I will say that people today are intimidated with the housing market because of the high interest rates and low inventory, but I would still encourage those that do ultimately want to buy to still actively look or at least keep their eyes open. Because, if someone does find the home of their dreams, don't let the interest rates be a deterrent to buying, as you could probably refinance down the road when interest rates come back down. My main recommendation is that someone really just do their research and weigh all the factors so that they can make the best decision for themselves.
TS:Amy, that's tremendous advice for our listeners to take a part of here. Do you have any words or things to bring to our listeners' attention before we wrap up the podcast today?
AM:Absolutely. We spoke a lot about remote basis, but I do want to also point out about the hybrid basis a little bit more. Strictly speaking from a real estate perspective, prior to the pandemic, office buildings were the heart and soul of business districts. However, since the pandemic, remote work continues to keep office occupancy rates low, whereas before the pandemic, it was estimated approximately 95% of New York City offices were occupied, while today, that number is actually closer to 47%.
AM:The idea of office space becoming completely obsolete, however, is not true. Instead, as companies elect to bring employees back to the office on a hybrid basis, opposed to fully remote, the commercial real estate industry has noticed a real shift in the demand, as now there's a flight to a high quality office space today. There is a focus on designing high quality office spaces that will draw employees in to come back to work in efforts to build organizational resilience and a firm-wide culture.
Companies view this shift towards high quality offices as a strategy to encourage employees to come to work, and they're almost equipping these employees with anything that they could need to be the most productive while they're there. This could include changing office locations to make it more convenient, changing the tenant mix, including high-end fixtures, boosting indoor air quality, better access to public transportation and parking, as well as high-end amenities including fitness centers or on-site restaurants and available outdoor space, even. Employers today should also consider the cost benefit analysis of keeping employees on a hybrid basis, opposed to fully remote. The high quality office spaces are much more affordable today since companies now need less office space for their workers due to the hybrid environment, so they can afford to splurge on smaller spaces and better buildings as an incentive to draw in and retain employees.
TS:Wow, Amy, let me tell you, that was absolutely tremendous and thank you, thank you so much for that valuable information. Listen, thank you for listening to The Bottom Line as part of the EisnerAmper podcast series. Visit eisneramper.com for more information on this and a host of other topics. Join us for our next EisnerAmper podcast when we get down to business.
Transcribed by Rev.com