Impacts of Remote Work on Urban Economic Models

Location, location, location has been replaced by affordability, affordability, affordability. As companies push return to office mandates, they may actually be pushing workers away. Why? Workers are willing to move or leave employers to find affordable housing. In fact, housing affordability is now the top consideration for homeowners and renters and that should have employers, cities and local economies all shaking in their boots. Here's the gist...more people are willing to move to less expensive areas further away from offices in city centers than a few years ago. Remote and hybrid have not only provided the flexibility to find more housing options, it's changed the demographics of major metropolitan areas. Historically, workers have tended to live in an area because of their proximity to work, but those ties are no longer as strong. We've already experiencing the implications. Cities such as San Francisco and Seattle continue to have high office vacancy rates that have fundamentally changed once bustling downtown areas and financial districts into shells of their former selves. Instead, more workers are relocating to the suburbs, farther away from their workplace. The other implication has to do with employers who continue to push return-to-office mandates. In a job market where available talent remains in demand along with a worker shortage likely to continue for decades due to declining birth rates, an aging workforce, and increasing retirements, that seems to be a huge disconnect as workers seek the flexibility and housing affordability that comes with remote and hybrid work. Based on that assumption, the growing share of remote-working renters and homeowners willing to live farther from their work location gives employers especially those who embrace remote and hybrid work increased access to a wider labor market. And that shift will benefit employers located away from major metropolitan areas and favor the suburbs https://lnkd.in/g_wFzmTr #housing #realestate #remote #hybrid #workforce #society

"The Five-Day Office Week Is Dead" - article by Nicholas Bloom, professor of economics at Stanford University. From the article: "In fact, the process of getting to work is more despised by employees than the need to actually work." "remote work saves companies money. It cuts overhead, boosts productivity and is profitable. And what is profitable in a capitalist economy sticks." "What about the news stories that companies like Zoom...calling employees back to the office?...I visited Zoom’s headquarters in September 2022...Employees living within 50 miles are required to work in the office twice a week. There is no requirement, however, for employees living more than 50 miles away." "Companies like Amazon, Meta, Salesforce and Zoom discovered that many of their best performers love working from home and that enforcing a five-day-a-week return to the office would have meant culling their top talent." "in 10 years, remote work is likely to increase, driven by two powerful economic forces...This rate of technological progress is accelerating...Second, we have business cohort effects. In the data, we see that more than 75 percent of start-ups allow employees flexible working locations. Start-up companies have been born in an era when having an office is optional and meeting customers and clients online are standard. Many of these companies have saved capital by forgoing offices and have saved on expensive urban salaries by hiring remote employees globally...their founding chief executives will grow into tomorrow’s business leaders." "Remote work has been good for almost everyone involved. We should support this golden moment and lay the five-day-office-week movement to rest." https://lnkd.in/esfcq9py #remotework #returntooffice #leadership

The Silent Crisis in Our Cities: What Empty Offices Are Telling Us In 2019, office buildings were still prime assets. Rents were high, demand was steady, and Houston’s business corridors were alive with energy. Fast forward to today, and the picture has dramatically changed. Just look at 5555 San Felipe Street, once known as the Marathon Oil Tower. This 41-story skyscraper in the Galleria area, once a landmark of energy and commerce, was recently sold in what can only be described as a distress deal. A building that would’ve fetched top dollar just a few years ago has changed hands for a fraction of its pre-pandemic value. And this isn’t an isolated incident. Across Houston—and many U.S. cities—office buildings are sitting half-empty. Many are being auctioned, foreclosed, or sold below their debt basis. Office landlords, brokers, and nearby small businesses are all feeling the pain. What’s driving this? Remote work. Yes, it started as a necessity during COVID. But today, it’s a choice—one that’s having real economic consequences. We’ve seen a cultural shift where working from home is no longer an exception but an expectation. Let’s be clear: this shift isn’t just hurting landlords. It’s hurting cities. It’s hurting community infrastructure, and it's killing the downtown energy that used to support coffee shops, lunch spots, and small vendors. Worse, it’s hurting company culture, productivity, and collaboration. Zoom calls can’t replace hallway conversations. You don’t build trust, mentorship, or team morale through a screen. And now we’re seeing the effects trickle through the economy—lost jobs, empty buildings, and declining asset values. The very structure of how we built business and real estate for decades is being challenged. I’ve said this before and I’ll say it again: working from home is convenient, but convenience isn’t always progress. As a business owner who has spent over 40 years building companies the old-fashioned way—with teams, in offices, working shoulder-to-shoulder—I still believe there is tremendous value in showing up, in being present, and in building together. The empty parking lots and discounted skyscrapers are telling a story. We should listen. Stay Blessed ! #CommercialRealEstate #OfficeSpace #ReturnToOffice #Leadership #HoustonRealEstate #RemoteWork #BusinessStrategy #FutureOfWork #Productivity

I’ve been in many discussions with CEOs grappling with return-to-office and its impact on social fabric, productivity, innovation, and - of course - real estate. With office attendance stable at 30% below pre-pandemic levels, CEOs now have a moment to think through where, when, and how their teams can do their best work. What happens next matters a great deal. Our latest McKinsey Global Institute work found up to 7 percent of people in major cities left for good, bringing their spending with them and dramatically reducing demand for office space. By 2030, remote work could wipe $800B from the value of office buildings in urban centers. Put simply: on current course and trajectory, our cities will struggle. One solution that stood out to me is the idea that urban stakeholders could adapt to changing working models by adopting more hybrid approaches themselves. While solutions will vary substantially by city, what’s clear is that firms, cities, communities, and whole economies must adapt to a hybrid reality - one that is here to stay.  mck.co/RE2023

– A new study uses satellite data to reveal how remote and hybrid work reshaped emissions across major metros. – Before the pandemic, 119 million U.S. commuters collectively produced 762 billion pounds of CO2 annually. When remote work surged in 2020, global emissions dropped by 17% in just one month, revealing the immediate environmental effect of fewer cars on the road. – Satellite data from NASA and the European Space Agency confirm that metros with more workplace flexibility saw smaller post-pandemic spikes in greenhouse gases, particularly traffic-sensitive NO2. – Flexible metros also grew economically—real GDP growth in the most flexible cities was double that of the least flexible ones in 2022, showing that sustainability and profitability can align. – Remote and hybrid models don’t just reduce emissions; they also enhance productivity and urban livability, offering leaders a rare chance to meet both ESG goals and business objectives. Do you think flexible work should be viewed as part of a company’s climate strategy?