The lasting impact of the Pandemic on real estate : key findings from McKinsey's market study

lenaicbezin
Jul 21, 2023
3 min read

Updated: Jun 12

Remote work, Hybrid places and Flexibility are the Future of the real estate !

The COVID-19 pandemic has had a profound impact on the real estate industry, with empty spaces and hybrid places becoming the new norm. McKinsey's Real Estate Practice recently conducted a market study to explore the lasting impact of the pandemic on real estate. In this article, we will discuss the key findings of the study and what they mean for the future of the industry.

Below are the 5 key takeaways from the study :

1 - Remote work is here to stay :

According to the study, "the pandemic has accelerated the shift towards remote work, and many companies are now embracing it as a permanent option." This shift has significant implications for the real estate industry, as it means that demand for office space is likely to decline in the long term. The study found that "up to 30 percent of the workforce in developed countries could work from home multiple days a week by 2025."

2 - The Rise of Hybride places :

The rise of hybrid places is another significant finding of the study. These spaces are designed to be flexible and adaptable, allowing people to live, work, and play in the same area. The study found that "there is significant demand for these types of spaces, and they are likely to become more prevalent in the future." In fact, the study predicts that "the number of hybrid places could increase by up to 20 percent by 2025."

As of fall 2022, US workers were going to the office just 3,5 days per week, on average, some 30 percent below prepandemic norms.

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3 - The need for Flexibility :

Flexibility has become a critical factor in the real estate industry, with tenants and landlords alike seeking more flexible lease terms. The study found that "shorter lease terms and more flexible arrangements are becoming more common." In fact, "the share of flexible office space in the United States is expected to increase from 3 percent in 2020 to 30 percent by 2030." Figures that had already been confirmed by several other studies of major players such as JLL or CBRE.

4 - The Importance of Technology :

Technology has played a crucial role in enabling remote work and hybrid places, and it will continue to be a significant factor in the future of the real estate industry. The study found that "there is significant demand for technology-enabled spaces, such as smart buildings and co-working spaces." In fact, "the market for smart buildings is expected to grow from $43 billion in 2020 to $68 billion by 2025."

5 - Sustainability is a priority :

Sustainability has become a top priority for many companies and individuals and this is reflected in the real estate industry. The study found that there is significant demand for sustainable buildings and spaces, and this trend is likely to continue in the future.

Conclusion

To conclude, the real estate industry is undergoing a significant transformation due to the lasting impact of the COVID-19 pandemic. McKinsey's market study highlights the need for remote work, hybrid places, flexibility, technology, and sustainability in the future of the industry. As companies and individuals continue to adapt to the new normal, the real estate industry must also adapt quickly to meet their changing needs. The industry must embrace new technologies, design innovative spaces, and prioritize sustainability to remain competitive in the years to come. The future of real estate is exciting, and those who are willing to embrace change and innovation will be well-positioned to succeed in the post-pandemic world.

To download the full report of the study, click below :