Working From Home to majorly impact property market in the future?


#1

So there have been discussions here in other threads about Working From Home (WFH) and what impact it may have on future house prices.

The idea is many employees will be insisting on the ability to WFH at least 3 days a week going forward, post pandemic.

This in turn means you can live more rural, away from major cities and their inflated prices. That would increase prices in more rural areas but delfate prices in urban centres.

The alternative view is, post pandemic, employers will want all their staff back in the office, maybe allowing 1/2 days but never more than that.

Discuss.


#2

… all those office buildings, how much office space did they build over the last 10 years Vs Housing?


#3

Strangely, I think increasing WFH options may reduce property prices in both urban and rural areas. In urban areas, potential buyers will now have the serious option of purchasing further afield and sellers will realise this which may reduce the sellers bargaining power in urban areas.

In rural areas, there’s still a massive oversupply of housing stock (probably several years worth) from the noughties housing boom. Many owners of properties in rural areas may have also not bothered marketing them and left them vacant thinking there was little hope of selling them. If there is now the serious possibility of city workers purchasing their properties, they may start refurbishing and marketing them and this may actually increase the supply of available housing stock to purchase in rural areas and reduce prices further.


#4

In relation to “The alternative view is, post pandemic, employers will want all their staff back in the office, maybe allowing 1/2 days but never more than that.”, Recently, Bank of Ireland has decided to leave one of its major Dublin city centre offices following a push to get its staff working from home. The company said the decision to leave Burlington Plaza 2, which is normally the base for about 700 people, so I think the WFH is not a short-term passing trend and companies that don’t offer it will lose good staff to companies that do, so they will all offer some version it going forward: https://www.thetimes.co.uk/article/bank-of-ireland-quits-city-centre-office-tk39txpds


#5

I suspect that it could be bad news for the “dormer towns” if there is nothing else going for them apart from their proximity to the major cities. Why live in a nondescript estate to WFH when you can be somewhere else that is much nicer.


#6

Suburban areas are not urban areas, so we really have 3 distinctions, Urban, Suburban and Rural.

I live in a suburban area and not because of proximity to the office, I’d be really surprised if large numbers of people currently living as I do upped sticks to a rural backwater because they can work from home 4 days a week, also there won’t be many rural backwaters left if it did happen.

There is a significant cohort of ‘office’ workers whose office is in a manufacturing facility and whose presence is required ad-hoc, carrying out functions such as engineering/scientific expertise and supervision. Working remotely is not new, most companies of any significant size use remote/outsourced services already, like HR screening job applicants or payroll.

Junior roles and graduates: How can you expand rapidly with lots of new junior/grad hires and train them, supervise them? You need a location where company values, culture and work practices are instilled. Manufacturing facilities adjacent to urban areas often have a young workforce who want to live in rented accommodation in an urban area.

After we’ve finished subsetting all of the above, I don’t see a mass colonisation of the hinterlands, it will be driven by lifestyle e.g. someone who until March was commuting from Mullingar to Dublin has now demonstrated they can work effectively from home, but remember that person could now be located in Poland or Vietnam.


#7

True. Rural living is not as romantic as the movies portray it. With constant rain, wind and dark evenings, it gets depressing very quickly. I reckon it will only become truly feasible/ tolerable once self-driving cars become a reality and there’s no hassle of going a e.g. few pints with friends even 50 miles away.


#8

Are we coming to the wrong conclusion in relation to the WFH on Urban v Rural v Poland? If it’s truly possible, wouldn’t workers eventually start migrating to the sunnier climates of the Mediterranean?


#9

I would fit into that category of “office” worker, I used to be full time on-site, now I only go in when there is an on-site task that needs doing. So for me living locally going in once or twice a week to do 3-4 hours on-site work with the remainder of work remotely is the perfect mix.
Some of my colleagues require a more on-site presence, so are only WFH for one or two days a week and most of the office staff & management are almost full time WFH with the exception of critical on-site meetings.

Most of these people already live out in rural areas, so there is no real need for any to move for work reasons, unless to another house with better home office/internet or other reasons.


#10

I would be surprised if many would take that option, unless they have no local connections.


#11

You’re probably right. But if one moves to the Mediterranean (or even rural Ireland) and it works, eventually others will follow. Kind of like when the Irish go to the United States, It’s easier when you already have friends/ relatives over there to get you set up. Then the low levels of migration may quickly turn into an avalanche.


#12

If you are building a team, or have any turnover on your team working from home all the time is a bit of a disaster. It is difficult to induct people in, train them up and keep tabs on them WFH compared to sitting around each other.

There is a reason why many businesses restricted working from home in many cases. When given the choice. Certain functions will push back and want staff at a certain level to be in the office once the kool aid wears off for them. Other areas will plough on and are happy as Larry with it, but I think this group has been somewhat overstated over the last 6 months.

Plus the government themselves are now trying to get staff back in to the office 3/4 days a week. They know it’s not workable for some, and the city centre property owners have started calling the shots.


#13

Even if only 10% of the current WFH employees becomes permanent, it would still has a significant long-term, permanent negative impact on the office, residential, retail, pub etc. market in Dublin.

For example, the Bank of Ireland decision not to renew their lease on Burlington Plaza 2 office at the end of 2020 which currently employs 700 workers as they will now all be working from home.

That’s basically an additional office building entering supply in January 2021 and the market didn’t have to wait 2-3 years for it to be built. That’s 700 workers who won’t be frequenting local shops, pubs, restaurants.

If such a situation applies to say a total of only 20,000 workers in other office spaces withing the city, wouldn’t that be the equivalent effect on the local Dublin economy of Google packing up and leaving Ireland, which I would imagine would be significant.


#14

Ah sure maybe Google or Facebuke will take on BP2 :eyes:


#15

I don’t think so. From my understanding, Google’s lease in Sandyford was for 5 years until their new building is completed down in the Docklands. If anything, Facebook and Google may be moving out of existing leased spaces in the next 1 to 3 years once their new headquarters are complete. And, that’s if they even need their new headquarters space now that they’ve revved up remote working.


#16

Was being a bit waggish as every second building in Dublin city centre over the last 10 years seemed to be about to be taken over by Google or FB.

When the banks can’t exit their own HQ buildings fast enough it tells you what they think of the market.


#17

That’s actually a very good point :slight_smile:


#18

I think that when Google and Facebook were leasing all that office space over the past 6-7 years, everyone thought that it would keep going. What they failed to realise was that the only reason Google and Facebook was leasing all that office space was because they were growing the number of their employees really fast and it takes times to build dedicated office space.

Google has almost completed theirs now and Facebook will soon so they whole process will probably now work in reverse over the next 1-3 years as they move their employees from the leased office space to the new buildings they actually own. This will dramatically increase the number of available office spaces within the city with little demand for them which leads to the obvious big drops in value.


#20

#21

Here we see how ‘the pandemic’ is being hijacked for purposes entirely unrelated to public health. The pushing of social distancing as ‘a new normal’ counters the imperative for companies to get more and more output from less and less space. This also impacts the retail sector where retail outlets with high rents compete against online suppliers with comparably zero rents, with covid pressure ballooning back up the minimum metreage that an outlet could consider taking, without ‘social distancing’ the likes of Brown Thomas in Dublin could be forced off street level completely, into the upper floors of the building currently occupied on Grafton street (said to be fifth most expensive for rent in world).