Index finds 58% of US executives and business leaders will invest in real estate decision-making in the current inflation and interest rate environment
NEW YORK, November 16, 2022 /PRNewswire/ — Ernst & Young LLP (EY USA) today announced the launch of its second annual EY Future Workplace Index (the Index), which tracks executive sentiment and behavioral data regarding the workplace of the future. The survey reveals surprisingly optimistic attitudes among business leaders toward real estate investing despite the economic downturn.
Which of the following programs, if any, has your organization deployed to encourage employees to return to the office?
The US economy is undeniably cooling and a recession is expected in 2023. Regardless of investment decisions, however, the macroeconomic outlook is forcing executives to look at their office portfolios in a new light. In the current inflation and interest rate environment, the index found that only 33% of US C-suite business leaders will reduce their investments in commercial real estate, while 58% say they Invest in commercial real estate, which could include improving or expanding the real estate footprint.
“The economic downturn will force executives to make important decisions about their real estate portfolios – from investments to space optimization to workforce models,” says Marc Grinis, EY Americas Real Estate, Hospitality & Construction Leader. “Employers are beginning to realize that they need to save their employees’ commute time, and many are investing in the ‘office of the future’ to achieve this.”
The latest EY Future Workplace Index also reveals the following:
- More than 70% of employees work from home at least two to three days a week. This is an increase from last year’s index, which found that only around 42% of employers used a hybrid approach. New and complicated working models have a major effect on a company’s real estate strategy, including the amount of office space needed and the cost of using that space. Nearly 60% use or will soon use reservation systems for space utilization and/or occupancy tracking.
- Among survey respondents, 64% have been renting or considering renting office space in the suburbs since the pandemic. Employers have responded to the deurbanization of the workforce seen during the pandemic by investing in hyperlocal offices to support the return to the office. The physical office remains a crucial part of a company’s ability to thrive today and in the future, and employers believe the connection employees experience within the physical office is worth the investment. In addition to predictable flexibility, companies are also investing in other avenues, such as in-person events (50%), meal provision (45%), travel reimbursement (38%) and childcare support programs (33%), to encourage employees to come to the office.
- Sixty-four percent of executives think flexible work options motivate employees. A mix of flexibility and technology in the workplace is a top priority. Most are considering the use of health and wellness management apps and other hybrid work technologies, such as digital and virtual collaboration resources, to optimize the workplace. For example, 44% of business leaders have enabled or are beginning to invest in the metaverse for social interaction, training, and/or recruiting purposes, and 62% have enabled or are beginning to invest in innovations and monitoring. in terms of health and safety, such as indoor air quality, contactless offices, etc.
- Of the companies surveyed, 40% have either started using a four-day work week or are in the process of implementing one. A protracted and tight labor market and changing work patterns are forcing employers to do all they can to attract and retain their workforce, and many are adapting the role of the office to stay competitive. A company’s overall work model needs to accommodate hybrid working or at-risk employees looking for more flexible options. The index found that 69% of business leaders have implemented or are in the process of implementing hybrid work technologies (video collaboration platforms, virtual whiteboards, etc.) to meet employees where they are found.
“Data is paramount to understanding your workforce and creating the best space for a new era of work,” says Francisco J. Acoba, Director, EY Americas Strategy and Transactions; Co-manager – Consulting and technology in business real estate. “Data-driven insights that reveal employees’ work habits will shape how executives design and approach the workplace in the future.”
To learn more about the EY Future Workplace Index, please visit EY Workplace reimagined.
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About the EY Future Workplace Index The EY Future Workplace Index anonymously surveyed more than 500 US executives and business leaders across a multitude of industries.
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