Covid-19 will change the real estate industry and the labor market forever

KPMG's report is a wake-up call for real estate corporations for office leasing. 

Not to mention that restaurants, cafes or other types of services that depend on the number of office workers in the central areas will also suffer if the company moves to work online.

According to CNN, the scene of skyscrapers full of employees will gradually disappear in the post-Covid-19 epidemic. This pandemic will force millions of American workers to give up their offices to work from home, or even worse, be forced to quit.

Currently, the survey shows that reducing workspace to switch to online or outsourcing labor is not only a temporary desire but gradually becoming a new trend of the post-Covid-19 era, right away. Even when a vaccine has been produced.

KPMG's survey shows that 68% of CEOs of large corporations plan to reduce their workspace. The main reason is that the pandemic has turned out to have led many executives to realize that employees can get the job done without going to the office. Even outsourcing work turns out to be simpler and more economical than hiring employees to sit in the office.

In fact, the trend of working online or outsourcing has existed before, but it was not until the Covid-19 epidemic broke out that many companies changed their labor models, thereby realizing the convenience of working methods. this. At the same time, the effectiveness of remote working also makes many businesses question the need for expensive central offices.

"We've seen proof that employees can be incredibly productive and productive remotely," KPMG CEO Paul Knopp told CNN.

KPMG's survey was conducted with companies with annual revenue of at least 1 billion USD or more and they show that even if the Covid-19 vaccine has been produced, the trend will shift to working online. or Outsourcing work will not stop. Clearly, American businesses are increasing investment in digital transformation when they realize that they are more efficient, economical and safer than the conventional labor model.

About a quarter of CEOs interviewed said they plan to invest more in the online working model. Meanwhile, about two-thirds said they would spend money on more advanced working models such as automation, artificial intelligence, etc.

"This is a long-term trend and it cannot be changed. Businesses are currently focusing on reducing the amount of space to rent," said CEO Knopp.

Changing labor structure

For employees, the company's online labor makes them feel quite mixed. Some feel liberated from the constraints of traditional office work while others struggle due to being busy with childcare or housework.

However, for the company, they not only save on space rental costs, but also take advantage of real talent. In the past, the origin or location of employees was quite important when the company preferred to hire people close to the office or were able to move closer to the workplace. But this factor has gradually disappeared with the trend of working online and Outsourcing.

KPMG's survey found that 72% of CEOs find telecommuting makes them more selective in recruiting talent.

"Where you live is no longer an important factor in hiring," said CEO Knopp.

The company can even save labor costs with the remote working model or Outsourcing. For example, a computer engineer living in Nebraska will demand lower wages than a colleague living in San Francisco or London. Similarly, outsourcing projects for workers in developing countries like China will be cheaper than hiring directly in the US.

In addition, the Covid-19 epidemic also makes current recruitment more flexible. CEOs can interview online or interact with candidates via computer instead of having to meet face-to-face like before, creating high efficiency in recruitment as well as saving costs and time.

Real estate industry shakes

KPMG's report is a wake-up call for real estate corporations for office leasing. Not to mention that restaurants, cafes or other types of services that depend on the number of office workers in the central areas will also suffer if the company moves to work online.

Therefore, the expectation that the offices will be fully staffed and stimulate the economy after the vaccine is in place is not really a viable idea. Even investors have now recognized the new trend and withdrew capital from real estate businesses.

Shares of the Vordano Realty Trust, which specializes in leasing office space and retail space in New York, have lost nearly 50% of their value so far this year. Another company that also deals in real estate in New York, SL Green Realty, also saw its stock drop 46% in the same period. Even the famous corporation Empire State Realty, which owns the Empire State Building, the symbol of New York City, has its shares depreciated by 55%.

However, KPMG believes that not all companies will move to work online, but will adjust gradually. Having a long-term lease as well as a long-established working culture makes it impossible for many companies to rush to change the model.

While tech companies like Twitter allow employees to work from home permanently, many companies are likely to adopt a hybrid model. That is, for a department at home to work, then convert the excess space into an online meeting room.

According to CNN