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Are you back in the office? In the hybrid work era, employee expectations are changing.

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Real estate and hybrid work

In the news

•

Swiping in. As employers enforce their rules on in-office attendance, some are using ID badges to monitor the amount of time employees stay inside of buildings. About six in ten companies with US offices keep office attendance records, per a survey of roughly 200 real estate leaders. Among them, approximately four in ten employers use badge swipes, data that reveals a computer’s location, or sensors to track attendance. One reason for executives’ focus on attendance is that companies don’t understand how workers are using buildings, one CEO says. [WSJ]

•

From conference room to classroom. College and university officials are buying office buildings at modest prices as demand for office buildings has fallen. In the US, 49 four-year private schools and 16 four-year public schools are among the institutions of higher learning that have purchased office buildings in the past five years. Unlike when converting offices into housing—which might require putting in bathrooms, kitchens, and windows—adapting them for school use generally doesn’t involve making major changes to buildings. [NYT]

“In an unmanaged scenario, we found that office demand in a median city was down by 13%, and in a dire scenario, some cities were down by 38%.”

On McKinsey.com

•

History lesson. It’s important to know the historical context when considering the US office market, David Steinbach, Hines’ global chief investment officer and cohead of investment management, shares with McKinsey partner Brian Vickery in a recent episode of Deal Volume. Tax reform in the 1980s and about 15 years of 0% interest rates incentivized landlords to “increase rent and create higher tenant inducements,” Vickery explains. That in turn raised tenants’ expectations and “distorted the dynamics of supply and demand within office buildings.”

•

What workers want. In the hybrid work era, “employees want a space that is social, creative, and collaborative, which is against the old cubicle mindset,” Vickery says. Although real estate has lagged behind in its ability to keep up with what consumers want, better data on how tenants are using office space once they’re inside buildings should enable companies to meet customer expectations more effectively, according to Steinbach. Listen to the full podcast for more on hybrid work and the future of real estate.

Understand changes in real estate

— Edited by Belinda Yu, editor, Atlanta

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by "McKinsey On Point" <publishing@email.mckinsey.com> - 01:41 - 30 Oct 2023

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Are you back in the office? In the hybrid work era, employee expectations are changing.

Real estate and hybrid work

In the news

“In an unmanaged scenario, we found that office demand in a median city was down by 13%, and in a dire scenario, some cities were down by 38%.”

On McKinsey.com