OPERATIONS: REMOTE WORK
The Remote Work Revolution FLEXIBLE WORK ARRANGEMENTS ARE RESHAPING REAL ESTATE MARKETS.
LUKE BABICH
I t’s hard to overstate how much remote work could reshape real estate markets. In a recent panel at Columbia University, one expert compared remote work during the pandemic to the Bolshevik Revolution. Another said that this is the first time employees haven’t had to physically live near their places of work. Their concerns aren’t as hyperbolic as they sound. A recent McKinsey study estimated that demand for office and retail space could fall up to 38% by 2030. That’s a scary thought to many investors. There are big disruptions in the residential real estate market too. Many buyers are coming to agents with a home office at the top of their wish list. But that’s not the only way remote work is reshaping the real estate market.
Moving becomes even more appealing when state governments in Vermont, Michigan, Nebraska, Connecticut, and others are offering financial incentives to lure remote workers to their cities. As a result, these states have seen an influx of new residents from New York, Chicago, and other expensive cities. Out-of-town buying power has caused some formerly affordable markets to experience a steep increase in home values and the price per square foot. The five largest increases in the U.S. were in Cape Coral, Florida; Austin, Texas; Boise, Idaho; North Port, Florida; and Provo, Utah. In these areas, home values have increased between 66% and 72%. Aside from Austin, none of those markets were considered “hot,” but now even vacant properties are flying off the market. With the real estate boom finally spreading from the most popular markets, investors may want to consider investing in the next Cape Coral instead of Los Angeles, Manhattan, and other current hot spots. HOME OFFICES ARE A MUST Home offices are such a popular feature now that some agents have said they rival a
home’s kitchen in importance. Buyers are looking for home offices that offer privacy, natural light, sophisticated finishes, and soundproofing. This has led many buyers, especially couples who each need a full-time work-from-home space, to look for larger homes. House flippers should take note. Space that might have previously been turned into a spare bedroom or a library could be repurposed as a home office.
HOME ENTERTAINMENT SPACES ARE MUCH LESS POPULAR
When everyone commuted to work, the home was a sanctuary. Now, after working at home all day, many Americans want to go out and socialize. Consequently, dedicated media rooms and theater spaces have become much less popular. In many cases, they’ve been converted to home offices. Investors should take a critical look at properties that have dedicated home theaters or media rooms. If they can be easily converted for other uses, that’s great. If not, they may have to be marketed toward retirement-age
HOMEBUYERS ARE EXPANDING THEIR SEARCH LOCATION
Americans no longer need to live within commuting distance to work, and many are now geographically extending their home search to areas once considered too remote.
46 | think realty magazine :: march – april 2024
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