There’s no doubt about it: The way we work is changing. Right at this moment, someone you know is working from their home office. From a co-working space. From an airplane. From the couch.
Part of this has to do with the technology developments and cultural shifts that have driven the adoption of remote working arrangements. And part of this is thanks to the “gig economy,” or the idea that more individuals are seeking temporary or contract jobs and a growing share of firms are contracting out work rather than hiring directly.
In the latest edition of Knowledge Leader, I share a recent study that found the number of Americans working outside the traditional employer-employee relationship has jumped from 10 percent in 2005 to nearly 16 percent just a decade later. This shift holds meaningful implications for office building usage. For one thing, many firms don’t provide office space to their contract workers. And the office space that companies do provide to employees is shrinking.
We’re now leasing about half as much space per new office worker than in prior expansions. Since 2012, our country has leased approximately 60 square feet per new office worker, compared to 118 between 2003 and 2008. To maximize smaller office spaces, many firms are providing fewer private offices and cubicles and instead offering more open, collaborative and flexible spaces.
Outside the traditional office, many workers are utilizing co-working or collaborative spaces. Regus, the industry leader in shared work space, has 3,000 locations in 900 cities across the globe while the upstart juggernaut WeWork claims 50,000 members who work in its spaces. Together, they and other providers of co-working space have leased several million square feet of space in the past few years.
Contracting and collaborative workplaces are key factors in why office vacancies remain elevated even with our economy at full employment, and why so little new office space is being built. So if the gig economy is here to stay and we don’t need as much office space as we used to, what real estate opportunities might lie ahead?
To read more about the impact the gig economy is having on commercial real estate, download the Fall 2016 Knowledge Leader magazine.
Andrew J. Nelson is Chief Economist for Colliers International in the United States. Based in San Francisco, he covers a mix of general economic topics as well as related issues that bear on the performance of property markets.