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What the World of Hybrid Work Will Look Like in the Future Employers look forward to a return to full in-person work, but their employees have embraced hybrid work and want it to remain.

By Chris Porteous

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

The pandemic ushered in an era of hybrid work. This is the greatest transformation of the nature of work since the Industrial Revolution in the 19th century. The Industrial Revolution shifted the center of production from homes to factories, and the hybrid work revolution has shifted it back to homes. For many workers, the majority or at least half of their productive work now occurs within their homes. Not only has the nature of work changed, so too has the nature of the office. Hybrid work remains contested. Employers look forward to a return to full in-person work, but their employees have embraced hybrid work and want it to remain. What will the world of hybrid work look like in 2022?

Related: The Future Of Workspace: Journey Into the New Year

Corporate office leasing will remain lower than pre-pandemic levels

In a report last year, real estate services firm Jones Lang LaSalle reported that corporate office leasing has not fully recovered from the pandemic. Although leasing volumes in the third quarter were up 39 percent compared to the same period in 2020, they are still 25 percent off third quarter volumes in 2019. Volume growth is at its slowest since the pandemic began.

Between the start of the pandemic in March 2020 to date, the United States' office space has shrunk by 138.4 million square feet. To put that into context, during the Great Recession office space in the U.S. occupied 103 million square feet. Investment in office space has subsequently declined, falling sharply from the start of the pandemic.

The pandemic hit occupancy rates hard, because the transmissibile nature of Covid-19 made office spaces high-risk, unhealthy environments. Forecasts of the pandemic's end have been disappointed as the Covid-19 has mutated into different variants. The pandemic is unlikely to just go away.

Apple's decision to delay a return to corporate offices indefinitely shows how difficult it has been for companies to return to normal. Apple has repeatedly announced a return to offices, only to be thwarted by a combination of Covid-19 and the desire of many workers for remote work to remain. Apple's struggles have been replicated across the country, with firms finding their plans to return to normal being derailed and many ditching offices completely.

REI built a headquarters that it has not used and is now trying to sell. REI has embraced a vision in which it exists as a hyper-decentralized firm with multiple satellite offices rather than one big headquarters. The concept has been used at scale already, although prior to the pandemic it was not widely used or even seen as desirable. GitLab, the open-core company, has always operated as a fully-remote business. Zillow is planning to allow 90 percent of its employees (some 5,400 people) to work remotely at least part of the time. Like many companies, Zillow has found that the old model of an office-centric business has been debunked.

New office models

A new model of work has emerged. In that model, a large portion of workers will be fully remote. Some will work according to a hybrid work model, while a minority are likely to remain in the office. In such a world, demand for office space will be low and declining. Many companies will move from large offices to smaller satellite offices, while others will become fully remote.

Many companies are finding that they have less need of long-term leases. In many cases, office leases are simply not renewed, especially in smaller regional or suburban offices run by large firms.

The data suggests that large office spaces are in the past. Occupancy rates remain abysmally low. In May 2021, only a twentieth of office buildings had occupancy rates higher than 10 percent, and by the end of the year that number was around 16 percent. In 2022, there is an expectation that a fifth of office buildings will be empty.

Reading these figures, it's easy to conclude that the office space market is dead. That would be the wrong conclusion. What is changing is what businesses want. Occupancy rates are recovering. But the gains are being seen by those offices that can meet the needs of an agile business that employs a hybrid work model. More and more workers are returning to the office to spend at least a few days a week there.

That changes the economics of renting office space. A firm can no longer rent or own a large building if that building is unoccupied part of the time, or under-occupied most of the time. Hybrid work guarantees that. The pandemic cements it. Because for health and safety reasons, it will be impossible for a sensible firm to fully occupy these buildings. Even if they could get buy-in for their workers to fully return to the office.

That makes collaboration offices so much more important. Shared spaces are the future. If one company cannot optimize its use of a building, it makes sense for the use of that building to be shared. Not only that, it also makes sense for businesses to sub-lease.

A company with lower occupancy rates in a building will want to consolidate its office space. Instead of occupying multiple floors, it will seek to occupy just one, or a lower number of floors. What happens to the rest of the space it doesn't use? It doesn't renew its lease, or it subleases it.

Companies are finding that subleases are not only cheaper than renting, they jibe with a company's need for agility. Short-term means the economic loss of having to abandon an office space is much lower. That's a positive for a business at a time of uncertainty.

Related: What a Post-Pandemic Return to Office Spaces Will Look Like for ...

The office will evolve

Once again, it's important to say that the office is not dead, it's changing. Companies are having to reimagine the office for an agile workforce in a world of hybrid work, uncertainty and a global pandemic.

You also have to remember that not everyone can go remote. Some teams simply cannot function at their best while working remotely. They need to work in an office.

What we will see is that around 70 percent of employees will work in some site owned by their company, at least some of the time. These sites will be scaled down offices, branch offices and other such sites.

Companies are learning to match the agility of their workforce with smaller, more flexible office solutions. The big office is (largely) dead, but smaller spaces, shared offices and distributed multi-locations are the future.

Related: Hybrid Offices: The Prospects of a Permanent Shift in the Workspace

Chris Porteous

Entrepreneur Leadership Network® Contributor

High Performance Growth Marketer

Chris Porteous is CEO of SearchEye, which offers unbundled digital marketing projects for clients and agencies across the globe.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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