If you're in the office sector of CRE, you probably don't want to hear about work from home. The asset class has taken a big hit, with national occupancy running between 40% and 45%, according to Deloitte Consulting — down big time from pre-pandemic's 61% to 65%.
The fewer people regularly in an office, the more a CEO and CFO have to consider whether keeping all the space they have is worth all the money it costs.
But consider for a moment the question of working from home in a different light. Not what it means for office owners and operators, but what it might mean for companies themselves. Even those in CRE.
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According to academics and experts from the European Bank for Reconstruction and Development, the University of Chicago, Instituto Tecnológico Autónomo de México, ifo Institute, Stanford University, and Princeton University and their working paper at the National Bureau of Economic Research, when workers save time by reducing commuting time, employers often benefit.
"The average daily time savings when working from home is 72 minutes in our sample," they wrote. "We estimate that work from home saved about two hours per week per worker in 2021 and 2022, and that it will save about one hour per week per worker after the pandemic ends. Workers allocate 40 percent of their time savings to their jobs and about 11 percent to caregiving activities. People living with children allocate more of their time savings to caregiving."
In short, workers give a significant portion of the time they save back to their jobs, even though they're not getting paid for it.
Now if only managers could recognize that.
As a partly overlapping set of experts from Stanford University, Instituto Tecnológico Autónomo de México, the Hoover Institution, and the Federal Reserve Bank of Atlanta noted in a Harvard Business Review article, "Remote work is one of the biggest changes to working since World War II, but it's being held back by a major disconnect between managers and employees."
That is, the two sides don't agree on "key aspects" of working from home, like productivity. Employees think their productivity goes up while managers think it sinks. And while "in many cases productivity per hour actually increases when working from home," it can come down to how you count.
Workers take note of the amount of commuting they do or don't. Managers consider raw output of the day, not commuting time. One side can see an increase in what they achieve, because they're spending fewer hours overall, while the other doesn't take the extra time into account.
"These differences in opinion reflect the need for more clear-cut policies on working from home," the researchers said, suggesting that companies move to Tuesday through Thursday in the office, Mondays and Fridays for those who want to work at home (and not everyone does).
The good news for the office sector is that such a plan would likely mean retaining all the office floorspace that has been leased because if everyone is in on a few days, a company will need maximum occupancy then.
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