The Future of Work is Hybrid

Historically, rent is the second-most important expense for most companies (understandably exceeded by their biggest asset, their people). On average, office space costs employers from MX$60,000 to MX$100,000 per employee per year (CBRE). In addition, office leasing is the only business cost that cannot be moved up or down, since owners use multiyear leases as a lock.

Since March 2020, companies have started to work remotely and as time went by, many of them have gotten rid of their contracts, even paying high penalties to do so. Today, companies are in a difficult situation in trying to adapt to the new hybrid working models: a percentage of their equipment requires them to return to their offices and companies do not want to enter into long-term contracts.

David, who has booked an Around workspace for 25 percent of his employees told us his story: "In April, we had to leave the offices that we had just remodeled in January. I don't think I'm ever going to have a three-year contract in any space again. It's no longer necessary." (David Almeralla, co-founder and director of Riot, a digital consulting firm specializing in luxury brands).

MIGRATING FROM A CENTRALIZED MODEL TO AN ECOSYSTEM OF SPACES

COVID has not created new trends but it has accelerated those that are emerging. All the changes and innovations that we could expect in the next 10 years will happen in the next three to five years. An example of this is demonstrated in a JLL study, which concluded that the growth of the flexible office segment would go from 3% of the total commercial real estate market to 30% by 2030. That growth is now estimated for 2025.

The "one size fits all" no longer applies. We have to stop thinking in a centralized model and understand the "office" as an ecosystem of spaces, where the home complements satellite workspaces. Today, companies are looking for hybrid schemes where there is a multiplicity of spaces, where work at home is complemented by satellite spaces.

"One (employee) will go to the office, another will stay at home, some will go to some satellite workspace or close to home. It will change the pattern," said Eric Schmidt, former Google CEO and Silicon Valley executive in an interview with Business Insider.

Those companies that take more extreme measures, such as having all their employees work from home, will lose out to those that adopt hybrid schemes that encourage collaboration and creativity among their employees.

THE MARKET FOR WORKSPACES IN 2021

For the first time in many years, the market will be governed by the needs and interests of demand. Those models that continue to be governed by the same obsolete laws of rigid, long-term contracts that require demand to commit to long terms or make an investment will have a hard time. For this reason, flexibility will be the new rule of the game. 

Distribution will also be a key factor in the new normality. Companies will try to reduce their employees' travel time to a minimum. Those models focused only on business centers will have a hard time.

Finally, comfort and privacy will be at the center of decisions. Employees must be safe and feel safe at the same time. Companies will prioritize private spaces, sharing amenities with a few companies rather than corporate buildings with thousands of people coming and going.

Around is rewriting the rules around work spaces at a critical moment that marks a before and after in the way we work. I invite you to learn more about us at https://around.to.