A recession will hurt the future of remote work, commercial real estate executives in Cleveland say
Commercial real estate company Jones Lang LaSalle (NYSE: JLL) found in its latest survey that 53 percent of companies are aiming to make remote work permanently available by 2025, but JLL Senior Vice President J.R. Fairman expects employers to call more people back to the office if a recession occurs.
“I could see broadly policies tightening up a little more,” Fairman said.
Other executives around the commercial real estate industry agree. Newmark Group Inc. executive vice chairman Terry Coyne also says companies could respond to a recession by scaling back remote work policies.
Fairman shared more of his perspective on the office real estate market and remote work in an interview with the Cleveland Business Journal.
We see employees have a lot more choice in how and when they work. In the past, there were a lot of organizations that said there will be no work from home or hybrid model. You had a lot of organizations when I graduated 20 years ago that said, look, ‘you’ll be here 9 a.m. to 5 p.m.’
The pandemic forced them to look at it, and now companies are seeing that they can do it. They’re opening up and becoming more, more accepting of that policy.
As I look around our office, I think there’s still a strong preference to have an office space. I enjoy coming in. I think I’m more productive in the office because I get distracted easily at my house…I don’t think people want to be 100 percent remote or in the office. They want the ability to have more flexibility…I think that’s something that everyone can appreciate.
There are positives and negatives…As the job market tightens up, there will be organizations that want employees back in the office. Some of the companies will see it as an opportunity to hire from outside of the market.
Having this flexibility is great, but there’s some risks that not being in the office is associated with for individual employees. It might be harder to get recognized for work when you’re doing it off on your own.
I think it’s still very early to tell, but it’ll be interesting to see what happens when the college students graduate who were impacted by the pandemic and how they impact real estate going forward.
I think a lot of them found remote work very challenging, and I think the feedback wasn’t positive. For that younger generation coming into the workforce, it’ll be key on how they view remote work versus having a traditional student-teacher relationship that we see in the workforce environment.
I think it’s still very early to tell. A trend that we saw prior to the pandemic is conversion from office space over to residential. There are different assets that will be revisioned. I think it might impact future development a little bit and shift more towards multi-family projects. That builds up that more 24/7 base…we didn’t have that density in downtown Cleveland 20 years ago. I think that having that density downtown will be positive for the supplemental services.
I think the statistics are overwhelmingly unanimous that employers are trying to improve the quality of their space….It varies whether its costing companies more or less. We’re seeing companies bringing in a much higher level of socialization space and open air collaboration spaces. They may shift their footprint, but they’re also shifting those costs to higher end space.
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