Though vaccines are being rolled out across the United States to combat COVID-19 and get people back to traditional workspaces, those who shifted to home offices are likely to continue in that mode for months, or even permanently. There are indications that many firms may continue remote work strategies even after unfettered by public health concerns.
Surveys conducted throughout 2020 suggest many office tenants are at least considering more flexible scheduling, even after full vaccine immunization. Even before the arrival of COVID-19, remote work was an accelerating trend, catalyzed by technological advancement and increasing digitization. These macro trends are playing out on a micro level within the private home. In the United States, 36 percent of households are rentals, the majority of which are in multifamily buildings. Participants across the multifamily industry are now considering how best to respond to current conditions that bring new meaning to the concept of a live/work/play environment, and whether to make material changes in design.
Nearly a year into the pandemic, 35 percent of all employed adults are working mostly or entirely from home, according to the U.S. Census Bureau’s Household Pulse Survey. Between 2010 and 2019, growth in the remote workforce vastly outpaced overall labor growth, 52 percent to 15 percent, according to the U.S. Census.
The number of people working remotely is unlikely to return to pre-pandemic levels. There is likely to be at least a modest sustained increase in remote work or flexible scheduling, an assertion supported by a few key factors: employer/employee surveys, major corporate announcements, and current job listings.
THE INDUSTRY RESPONDS
Many renters faced with a sudden and indefinite shift to working from home in March 2020 discovered limitations and challenges with their existing spaces, and the multifamily industry has turned a keen focus on how to address immediate concerns around safety and flexibility. It has also begun to seriously consider the idea that more of its current and future tenant base may be remotely employed long term. Some designers and developers have even begun to make incremental changes in support of that direction. Should the nation see higher remote-work levels moving forward, it is likely most remote workers will choose to conduct their jobs in their own homes: pre-pandemic, 80 percent of workers who self-identified as remote employees primarily worked from their homes.
Some local and national developers appear bullish on work-from-home trends, while others have adopted a wait-and-see position and have not made any changes, and do not yet plan to. Others expect no significant shift in the way units are designed and developed, and believe most changes made to multifamily properties in the wake of COVID-19 will be short term only. The one through-line was that all industry participants acknowledged they are thinking critically about current trends and how they may impact future strategy. Reported material changes to existing units, or units in design or development, thus far have been modest but telling. Some key themes emerged relating to a handful of factors: building amenities, unit mixes and in-unit design.
A multifamily “amenities war” that ran the gamut from gyms and housekeeping services to rooftop community gardens, personal shoppers and digital driving ranges has, on one hand, been temporarily laid low by social-distancing concerns that prevent residents from fully and freely using these facilities. The multifamily industry has continued to innovate in the next generation of cutting-edge amenities for a post-COVID-19 world, however, with a TikTok-content creator studio as one example. Developers and landlords have also honed in on amenities that meet their residents’ current remote-work needs, anticipating elevated, sustained usage in the future. Co-working spaces were gaining favor as an amenity before 2020, but current conditions are likely to underscore the importance of comfortable, safe and efficient co-working spaces within multifamily properties.
The Wall Street Journal reported Philadelphia-based multifamily developer Post Bros. pivoted to adding co-working space in lieu of entertainment amenities in a couple of properties under construction as a direct result of trends that emerged during the pandemic. This is echoed in other industry responses, many of which include plans to incorporate more common spaces for remote workers. Multifamily developer Greystar Real Estate noted increased demand for work-from-home spaces among its tenant base and envisioned changes to meet the trend. According to Noelle Sharbaugh, managing director with Greystar, “permanent modifications will include working nooks, booths or pods that provide separate working spaces for all residents.”
Phyllis Hartman, president of Hartman Design Group, noted her firm was already expanding co-working amenities in new construction and repositioned properties to meet the demand of the remote worker before the pandemic, but now the design of co-working amenities has shifted, with a greater focus on safety, privacy and purpose.
“In new co-working spaces, we are designing fewer communal tables and increasing the number of private work pods,” Hartman says. “Residents want to have spaces for virtual meetings, podcasting and conference calls, and these work pods are equipped with the appropriate acoustical properties, lighting and backgrounds to enhance the user.”
Unsurprisingly, fast and reliable internet service and strong cell-phone coverage continue to be of utmost importance in the building-amenity hierarchy. Apart from amenities directly relating to remote work, a broader theme of increased overall amenities usage due to more time spent at home puts additional emphasis on package lockers and management, as well as refrigerated storage to accommodate online grocery purchases.
Many renters who pivoted to remote work in 2020 had to improvise within small units, catalyzing demand for more space at similar cost. This has manifested in a wave of urban-to-suburban residential relocations, as city amenities remain challenged during the pandemic. Nearly two dozen industry veterans surveyed in this study implicitly saw this trend as temporary, with not a single respondent noting a shift in geographical focus for future development. Yet, every developer is considering if, and how, tenant space needs may fundamentally shift. Financial considerations on the tenant side will likely deter developers from dramatically increasing unit sizes overall, especially for urban multifamily development.
“While we expect growing numbers of younger urban renters working from home, we will not significantly increase the size of our units, as price-point will continue to be a governor for this demographic,” says Doug Firstenberg, principal at Stonebridge.
One of the most notable changes developers and designers are anticipating in response to a potentially larger remote workforce is increasing diversity in unit mixes, especially when it comes to including more units with dens. There is a clear expectation the one-bedroom-plus-den format will emerge as an increasingly attractive unit option. One respondent notes these units had fallen from favor somewhat before COVID-19 hit but now are gaining more traction in designs for future projects.
One project reported in development within a major Eastern Seaboard market has already retooled the unit mix to add more than double the amount of these units than were in the initial plans. As some multifamily owners and occupiers see it, dens offer more space for potential remote work/flexible use while keeping renter costs lower than for two-bedroom units.
Common-area workspaces were a recurring theme among industry responses, but so were in-unit changes to support remote work — and more broadly, overall flexibility. Developers expressed interest in re-examining layouts to maximize usability and accommodate workstations, exercise spaces and drop zones. Britt Snider, head of development for Redbrick LMD, notes the firm was rethinking unit design layouts to find nooks for either in-unit fitness or workspace, rather than having straight demising walls, and finding ways to be flexible by designing apartments with wider floor plates. For existing units, several asset owners and developers noted a focus on creative furniture solutions. Richard Ellis, vice president with Boston Properties, describes enhancing existing units by including mechanical furniture systems to be easily maneuvered to make more space for work during the day. “We are also focusing on creative furnishing options for more units in a building than a typical one-or-two model marketing approach and, in some cases, are marketing those as turnkey furnished units, allowing prospects to see firsthand how a given floor plan can function as both a comfortable remote-working environment as well as a unit meeting their traditional living needs.”
Balconies were often mentioned in interviews with developers. A Washington, D.C., metro-area firm specializing in multifamily housing noted requests and demand for balconies have increased substantially, which many developers are aiming to meet.
One developer noted that pre-pandemic, it aimed to include balconies in 40 percent to 50 percent of its units; now, that share has grown to 70 percent. Other respondents highlighted increasing demand for a variety of outdoor areas, including balconies, terraces and patio spaces, and they anticipate rising rent premiums for properties that provide them.
COVID-19 has wreaked economic and humanitarian havoc in 2020, yet the multifamily industry has remained resilient because of the fundamental need for shelter. Post-pandemic, it is likely more people will work remotely from their homes than was occurring pre-pandemic, adding another important element to the value of multifamily assets but also requiring new design considerations during the development (or renovation) process.
Indicators suggest remote-workforce numbers will remain at least somewhat elevated as a legacy of COVID-19 but, regardless, underlying growth trends in remote working already present pre-pandemic will likely cause a greater percentage of renters to consider layout design, amenities, and location carefully in relation to remote-work needs.
Lisa DeNight is research manager, and Alexander (Sandy) Paul is senior managing director of national research at Newmark. This article was excerpted from the report titled Nooks, Balconies and Beyond: Rethinking Multifamily Design Post-Pandemic, produced by Newmark and Hartman Design Group. Download the complete report at this link: https://bit.ly/2JSl10u