"The Rise of the Home Office"
/By Andrew Dealy, Managing Partner
Back in May, Twitter's CEO Jack Dorsey surprised many when he sent a company-wide e-mailing stating that employees could work from home "forever." Dorsey cited Twitter's focus on decentralization and its need to support a workforce capable of working from anywhere given the circumstances brought forth by COVID-19. Google and Facebook soon followed suit by extending their respective work from home policies into 2021. These decisions were made even more remarkable by the fact that all of these companies had recently spent billions creating their own state of the art campuses in Silicon Valley. Yet it was clear to them that the entire premise of how and where Americans work has been disrupted, and not just on a temporary basis.
Companies across the country, from those aforementioned tech giants to small family run businesses, are responding to feedback from their employees in real time. A newly released survey from Zillow found that 75% of Americans working from home due to COVID-19 would prefer telecommuting at least half of their hours even after the pandemic subsides. Working from home in some capacity has become an expectation rather than the luxury that it once was considered.
Given that only 7% of the U.S. labor force had the option to work remotely prior to COVID-19 and that 42% is now working from home full-time, it's a safe assumption that the majority of homes were not adequately prepared for this new stress test. There are anecdotes of affluent teleworkers investing tens of thousands on high-end home offices to replicate the environments that their employers once provided. But that's not an option for the majority of people, let alone renters, as many continue to crowd around kitchen tables and turn closets into makeshift phone booths. Another prevalent issue is that 35% of the population has such deficient internet, or no internet at all, that it prevents telecommunicating entirely.
This consolidation of working and living space has pushed developers to reconsider the design and functionality of homes in order to attract buyers and renters for the duration of this stay-at-home era. According to data from Zillow, there has been a 17% increase in the number of listings that contain the phrase "home office" versus this time last year. If those purchasing homes are now expecting dedicated office space, rental options must also adapt to remain competitive with for sale product.
We've personally responded to this surge by moving to more 4 and 5 bedroom models at our own single family rental (SFR) communities. These extra rooms essentially operate as flex spaces, either utilized in the traditional sense as bedrooms or as converted home offices. The majority of our design plans now include office nooks connected to the kitchens, which we've found to be particularly useful for families that have both parents working simultaneously. High-speed internet is another prerequisite for our homes considering that many households are streaming multiple services (and Zooms) at any given time.
With our built-for-rent SFR product, we're fortunate that we can adjust to evolving market conditions on a house by house basis over 2 years as opposed to traditional multi-family that has to get everything right before even breaking ground. Right now, home offices are in and our plans will reflect that trend for as long as demand emanates from the ability to work from home. Meeting that demand will drive higher occupancy levels and rents, which will ultimately translate into greater returns for our investors. We're excited to work with our architects to maximize work space (and returns) at our next SFR community!
Andrew Dealy, Steel City Management LLC