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COVID-19 has upended many facets of everyday life. Over a year into the pandemic, more than half of Americans are working from home. This disruption to work has inflicted an emotional and mental toll on many workers. The absence of dull and inane conversation about the weather while refilling a coffee is strangely and profoundly missed. Face-to-face interactions with colleagues in an office touches on a basic human need. Indeed, this fundamental yearning for connection has undergirded the rise of coworking spaces.
Coworking spaces are shared workspaces that provide professionals the amenities of a conventional office for a fee. For freelancers, entrepreneurs, and remote workers, coworking spaces provide desks, meeting rooms, and, importantly, the presence of other people. Compared against a home office, coworking spaces provide a better experience. The business model behind them is a form of lease arbitrage. Providers take leases for large spaces that can last decades and slice them up to smaller chunks of time and space. This makes it easy for an individual or small business to access commercial office space that was previously only available to large corporations.
Pandemic Pains Might Be Passing
Offices (both conventional offices and coworking spaces) have not fared well during the pandemic. According to JLL, office vacancy rates in the US reached 17% at the end of 2020. Professionals everywhere have heeded the call to stay home and limit interactions with others. Once bustling spaces became sparsely populated and socially distant.
WeWork is perhaps the best known brand in the coworking landscape. It saw occupancy rates across its global portfolio drop to 47% at the end of 2020, compared to 72% occupancy at the start of 2019 (the year before the pandemic hit), according to the Financial Times.
With cases plateauing and vaccinations increasing, the end to the most acute impacts of COVID-19 may be in sight. But the prospect for a quick recovery in conventional offices is not sanguine. One survey shows that only 27% of employers plan to return office-based employees to physical locations in the near term. Coupled with high vacancy rates, commercial office inventory may hang around for some time. WeWork, however, expects its occupancy rates to reach 90% (above the company’s pre-pandemic occupancy levels) by 2022.
What Does This Mean for Commercial Building Technology?
No one knows. Large flagship office projects used to serve as pilots to deploy the latest technology. But it may take years for these projects to recover. Meanwhile the existing stock of office space may need to undergo a fundamental change—adjusting to a remote workforce. That may mean increased deployment of Internet of Things solutions, real-time location systems, or other intelligent building technology to make existing spaces more flexible.