The ‘seismic shift’ of remote work will continue, IWG CEO says

When COVID-19 struck, employees around the world were forced to work fully remotely for the first time. But as the pandemic stretches into its third year, vaccines become more widespread and hospitalization rates fall, companies have tried to get employees back to full-time office work. JPMorgan Chase’s Jamie Dimon has insisted that a hybrid style “doesn’t work.” Morgan Stanley CEO James Gorman says remote work is not an “employee choice,” and Disney’s Bob Iger has required employees to work in person four days a week.

But while top managers are doing their best to get employees back into the office, many just don’t want the way it was before. And it could have a huge impact on real estate, according to the CEO of flexible workspace giant IWG.

“A lot more people are more demanding and companies are allowing them to work close to home,” Mark Dixon told CNBC Squawk box Europe on Tuesday. “This is a massive shift for real estate. It’s a fundamental seismic shift where technology has basically allowed people to work from anywhere, and they are doing it.

“There’s this assumption that people actually like commuting to a central business district. They don’t,” he added. “It’s a complete waste of time and money, and they don’t want to do it.”

Dixon’s company is of course primed to capitalize on the move away from traditional offices, as IWG (formerly known as Regus) specializes in creating hybrid workspaces around the world. But he’s not the first CEO to realize that the world of work is changing fundamentally. shark tank Investor Kevin O’Leary said last week that a “new generation” of workers are refusing to go into offices because they’ve only ever worked remotely. And several companies, including Coinbase, Lyft, and Reddit, have switched to hybrid or remote-first work arrangements.

But rather than despair over the office reorganization, Dixon said there are tremendous opportunities ahead for landlords and commercial real estate developers as they find new uses for their spaces, even if they consider getting rid of them entirely.

IWG did not return immediately wealth‘s request for comment.

Some real estate developers are already converting offices into residential units, and new residential properties are being built with “well-lit workspaces” in mind, architect Jessica Hester said recently Talk about business. Traditional office space is also expected to become vacant over the next 10 years. The national office vacancy rate was around 12% in 2019. By 2030, that number is projected to rise to 55% above pre-pandemic numbers, according to real estate firm Cushman & Wakefield.

Remote work has also forced big employers like Google and Meta to downsize their office expansions, and New York real estate giants have also had to consider giving up their office space.

The rise of flexible work arrangements is already costing New York City more than $12 billion a year as fewer downtown office-goers spend on leisure expenses related to going out to eat. Shopping and entertainment have also declined significantly. This results in lower tax revenues for cities from commuter and parking fees.

But Dixon added that while employees won’t be coming into the office every day or as often as they were before the pandemic, the office space won’t be entirely outdated. Employees still like the “drop-in” space that offices create to meet colleagues, he said.