In recent years, there has been a fundamental change in working practices and workplace environments. The COVID-19 pandemic and the accelerated trend towards digitalization have augmented this process and led to a remarkable revolution: New Work. A recent study from the ifo Institute provides valuable insights into the impact of the latest developments on the use of office and residential space.
Based on the ifo Institute’s findings, we predict the following changes:
Declining office occupancy as a result of the COVID-19 pandemic and digitalization: The COVID-19 pandemic forced companies around the world to adapt the way they work. Remote working and digital communication became the new normal. These changes have led to a drastic reduction in office use, as the Ifo Institute study now confirms. Compared to pre-pandemic levels, there are now three times as many unused offices. Workers appreciate the flexibility of working from home, while companies have realized that decentralized working models can be efficient. This shift requires a rethink of how office space is used.
Residential space will increasingly need to cater to remote working requirements: While office use is decreasing, demand for residential space is on the rise. More and more companies are offering their employees the opportunity to work from home and have eliminated central offices altogether. Space for setting up remote working options has thus become an important factor in housing selection.
Alternative workplaces in and around residential environments: In order to reconcile the changes in working practices and environments with employees’ living and home environments, temporary workspaces close to residential areas are becoming an increasingly attractive proposition. Co-working spaces and other flexible working environments allow employees to work effectively, even if they have families or cramped living quarters – and without having to deal with long commutes.
A paradigm shift in land use and urban planning: The accelerated new work trend requires a rethink as to how land is used and zoned. Municipalities will need to develop more flexible concepts to convert dysfunctional inner-city commercial space into attractive residential space. This approach will not only increase the supply of housing, it will also revitalize city centers and promote sustainable urban development.
The ifo Institute study highlights the impact of the COVID-19 pandemic and digitalization on the world of work. For us, the decline in office occupancy and the growing demand for residential space and remote work facilities create attractive new potentials for our real estate development and conversion projects.