For New Jersey-based tech consultant Simone, the ability to work from home is non-negotiable.
Saving money and time on a long commute “means a lot,” she told MarketWatch. Simone has been working from home since 2019 when she decided being the only employee in her office made no sense, especially since she was on Zoom ZM.
Meetings all day with her team in California.
Getting to a job in New York City, where office occupancy is rising, would be a one-hour door-to-door journey, according to data from Kastle Systems, which tracks key card swiping.
Simone’s preferred work environment is one that a real estate company relies on when it comes to investing in homes.
“Offices are in big trouble,” Ben Miller, co-founder and CEO of Fundrise, told MarketWatch.
Fundrise, a real estate startup founded in 2011, manages a fund that allows users to invest small dollar amounts in real estate to take advantage of price increases. The company also operates as a landlord and has invested in real estate nationwide.
According to Miller, the coronavirus pandemic has sparked a major cultural awakening that has called into question the efficiency of in-person work in an office, after nationwide lockdowns failed to deter employees from continuing to work from home.
Fundrise is now betting that more Americans will choose to live in the suburbs rather than return to the large, office-focused city centers.
Miller said he initially saw growth in markets like Brooklyn, Los Angeles and Washington, DC, but after five years Fundrise decided to exit those markets.
Living in a city is expensive, especially with a growing family, Miller explained. Living in the city itself is also expensive given the rising rents. Rents are hitting new record highs, according to Realtor.com’s June report.
“Offices are toast. It’s like saying malls are going to come back,” Miller said. “Why should people work in offices? They didn’t exist 100 years ago. They came from the same mentality as industrial production.”
For Simone, privacy when working from home is very important for a number of reasons. Working from home means, “I organize my own schedule… make time for my family, for all the things I have to do,” said Simone.
And when things crop up, like an illness or painful menstrual cramps, she doesn’t have to schedule time off from work. “When I got my first job out of college, I used to bring my heating pads into my office and use them very discreetly on my desk, with a throw over them so they wouldn’t be noticeable,” she recalls.
Fundrise has invested in apartments in the sun belt and owns up to 17,000 units and then single family homes. The company now has over 5,000 single-family homes and 17,200 apartments. The company is aiming to purchase more single-family homes in the short term.
Not everyone agreed with Miller’s assessment of where Americans prefer to live today.
“[T]The affordability game is starting to disappear in many of these areas,” Thomas LaSalvia, senior economist at Moody’s Analytics, told MarketWatch.
LaSilva, who disagrees that offices are still “toast,” said rents for apartments in central business districts have not only rebounded from pandemic-related declines, but have even jumped 11% above 2019 levels, based on Moody’s data .
“Urban areas have rallied tremendously from a demand and rental perspective, and it’s not just New York City — it’s everywhere,” he said.
According to Kastle Systems, office occupancy rates rose four points to 44.1% after the July 4 holiday in the top 10 US cities.
The San Francisco offices saw the largest jump in occupancy to 38.1%, “the highest since the pandemic began,” the company said. More than half of the offices in Austin, Dallas and Houston were occupied.
Even in markets like Chicago, the city where companies like Boeing BA,
and Citadel, LaSalvia has seen “really, really strong” office leasing activity in recent quarters.
And “there’s even evidence from surveys that early career workers actually want to be in the office a few days a week and still want to live in cities because they feel it brings career benefits,” LaSalvia added. “Nobody ever said higher education online is better than in person.”
Write to MarketWatch reporter Aarthi Swaminathan at email@example.com.