Indicators in Focus examines measures of business and economic activity that will help tell the story of 2022.
One of the clearest changes during the pandemic has been the blurring of the line dividing work from home. With many office spaces shutting down and workers being asked to operate virtually or from home, commercial real estate has seen a shift. Currently, shared workspaces make up only about 5% of commercial real estate. But such locations gained credibility over the past two years, and their share of the market could drastically increase as some companies choose to keep workers in a virtual format.
Gerald Smith is the CEO of Plexpod, a Kansas City company that operates shared workspaces. He says the shift was expected to happen before the pandemic, and COVID-19 simply accelerated things.
“If you go back and look at research that was pointing for a decade or two decades from now, without a pandemic, this is what was projected — this hybrid workspace, this concept of more flexibility in the workspace,” Smith said. “So the pandemic just accelerated everything.”
Hear more: Part 2 of a look at key 2022 indicators from the Market Dives podcast
The move could be beneficial for both employees and employers, which is part of the reason Smith believes the shift would have happened anyway and is likely to have staying power beyond the pandemic. He said 44% of workers preferred some sort of hybrid model and currently over 60% of companies are offering something like that. Many companies have realized they don’t need large workspaces, and that occupying smaller footprints can allow them to get out from long leases that are expensive and don’t allow for as much flexibility.
“We’re trying to react quickly as we can,” Smith said. “But it really is that progression of the consumer saying, ‘I don’t want to make a long-term commitment,’ which then forces landlords to say, ‘Wait a minute, we’re gonna have to consider this.'”
The sector’s immediate growth prospects have a lot of variability, Smith said, noting that estimates for the share of landlords offering flexible commercial real estate or coworking spaces by 2024 range from 17% to 50%. Still, that is a significant increase from the current figure, and it could have massive implications for the way in which employees and companies approach work responsibilities in the future.