Prior to the 2020 pandemic, the American workforce was making a slow but persistent change to the way we do work. Now, we’re changing the way we work and live due to a significant factor — remote opportunities. Most notably, remote work is changing the face of urban and suburban geographies. Find out how moving during the pandemic and ongoing industry trends around dispersed teams is reshaping neighborhoods and the rental market.
Pre- and Post-COVID Remote Work Trends
Before the pandemic, remote full-time workers accounted for only 17% of the workforce. During the first year of COVID, the number of full-time remote workers quickly spiked, and in 2021, the number of full-time remote workers still remains higher at 44% for now. Given that 80% of company leaders plan to continue remote-work models even after the pandemic has ended, experts project that as much as 70% of the workforce is expected to work remotely by 2025.
The ongoing upward trend in remote work creates several changes to American lifestyles, including a significant shift in living standards. From location to rent versus own, to dwelling size and desirable neighborhoods, to increasing technology requirements, most Americans are no longer tethered to their employer’s office or limited by commute times. The newfound flexibility in geographic location has led to an exodus from many urban environments, opting instead for suburban and even rural living. Other mobile workers are moving to less expensive cities that offer a more desirable lifestyle than other cities.
Remote Workers Moving During the Pandemic and Related Rental Market Trends
Let’s take a closer look at how remote work is moving industry trends in new directions, including the rental market. A number of impacts have revealed themselves.
Transportation heavily used by commuters, such as trains and subways, is experiencing ongoing diminished use. Without long commutes, there’s more time for hobbies, social media and other lifestyle activities such as exercise, outdoor time and family time (which all affect where people choose to live to accommodate these lifestyle changes). There is a resulting redistribution of demographics across geographies as people shuffle into new living arrangements now that they are not tethered to a job’s physical location.
Even though the housing market has been a seller’s market for some time, many homeowners were already making real estate investments geared toward a rising demand for high-quality rental options. And when seeking high-quality rentals, residents demand smart home automation, spaces designed for work and life, more sustainability measures and nearby amenities.
Generally speaking, corporate talent is redistributing itself away from gateway markets, such as metros and cities, to live in smaller communities and neighborhoods, with a few exceptions.
Many families are moving to more rural locations to raise their children and live a slower, more minimalist lifestyle. Upwardly mobile, career-focused individuals and couples are choosing suburbs that have amenities nearby but also offer lower rent, more space and less crime.
In fact, largely rural communities and suburbs, such as Boseman, Montana, and Jackson Hole, Wyoming, are being called the nation’s Zoom Towns, given the influx of remote workers seeking small-town life with big-city remote jobs. With a larger population, these towns are enjoying a higher tax base, and smart investors are enjoying being the first to market with various solutions that serve former big-city dwellers and their needs for digital services and city-type amenities.
Also, young professionals entering the workforce are moving to urban settings for a robust social life and faster pace. However, they are favoring smaller metros like Miami, Nashville and Denver over more expensive cities like San Francisco and New York. Given the shift in demand, city rentals have lowered rent while suburbs are raising the rent. There’s a low inventory challenge in suburban and rural areas, leading to a race to build more desirable rentals for the new and latest demands of these shifting demographics.
Rentals Over Ownership
Many residents have flocked to the home-buying market to build their new remote-work lives. More notable is the vast majority of real estate investors buying suburban inventory to add to the rental inventory, creating a housing market boom. The boom is leading to a push into the rental market. Given the low inventory and high demand, rents continue their upward trend.
And while the geographic shift in demographics is widespread, not everyone is ready to buy a new home. Many renters are enjoying the idea of trying out new cities, states and types of dwellings. If Sedona is beautiful but living in a tourist town isn’t what they imagined, they can finish their lease and move to Boulder, Colorado, for a taste of mountain life. Not quite nomadic but highly mobile lifestyles are placing the rental market at the center of a high-demand frenzy.
Types of In-Demand Rentals
Whether urban or suburban, full-time remote workers are not looking for typical rentals that would have served previous generations. Instead, they want more for their money, given the higher rent and ability to shop rental homes across the country.
Instead of a traditional studio or a typical layout with a living room, kitchen, bathrooms and bedrooms, remote workers need space set aside for distraction-free office work. They also want multipurpose spaces that allow for home workouts and more storage, given their increased commute time spent on hobbies or outdoor activities. And they need city amenities nearby to maintain the luxury of convenience they’re accustomed to.
Perhaps the most significant difference is the increasing demand for smart home automation. Keyless entry doors, security systems and home surveillance offer a sense of safety and security. Faster internet with greater bandwidth to allow for simultaneous gaming by family and friends who aren’t working, on top of uninterrupted internet for those who are on video calls or sending large files, is a non-negotiable must-have.
Renters are also looking for ways to live more sustainably and to save money on utilities and other measures, especially since they are paying higher rent on the same income. In fact, many workers see their remote life as a desirable work benefit and are willing to take as much as a 10% pay cut for the option. This means they want the ability to monitor and access their appliances with their mobile device. For example, being able to manage their thermostat and sprinklers and get notified of leaks or an open fridge door is an impressive financial solution and green living brag rolled into one convenient mobile dashboard.
These same smart home automations are also non-negotiable must-haves for landlords who are building their real estate empires. And it’s not just to meet the demands of renters. Landlords increasingly require fiscally responsible ways to manage their rentals remotely. Early detection of a busted water heater or HVAC system can mean significant savings and delight renters at the same time.
Remote work is here to stay. And the leap in the percentage of full-time remote jobs led to the idea that moving during the pandemic was an ideal step to take. While there may be some shuffling among companies as they find the best collaboration software and dispersed team management techniques, full-time remote work is expected to continue to rise for at least the next several years.
That means the rental market is expected to keep adjusting to the demands of renters, which include small city-like neighborhoods continuing to grow in America’s suburbs. It indicates increased competition among metro and suburb rentals to attract quality remote-working renters. It also means planning for in-demand features, such as smart home automation, fast access to the digital spectrum and layouts that reflect remote-work lifestyles.
Buffer – State of Remote Work
Wall Street Journal – How Remote Work Is Reshaping America’s Urban Geography