VOL. 8 | NO. 35 | Saturday, August 22, 2015
EMPHASIS Commercial Real Estate
Freelance, Remote Work Part of New Office Reality
By Lance Wiedower
In its 2015 list of the top 100 companies to watch for remote jobs, FlexJobs looked at the job-posting histories of more than 30,000 companies last year. The report, released in January, revealed a 26 percent increase in the number of remote jobs posted, hinting that the option to work from home is becoming more widely accepted in the broader economy.
Lisa Mac, who started the co-work space Studio688 in Memphis earlier this year: "Freelancing is growing because people are recognizing their own power."
(Memphis News/Andrew J. Breig)
The trend of companies allowing more employees to work partially or even 100 percent remotely is expected to grow as technology advances. That, along with corporate downsizing from the 2008 recession, is playing a role in what could become a decreased need for office space.
Bryan Evans, vice president at NAI Saig Co., said he is seeing trends of downsizing in some sectors and growth in others. He didn’t point to any one reason, but it is clear the office real estate blueprint is being tweaked.
“I have seen a healthy mixture of owner/users searching through the East, Northeast and 385 office corridors, looking at options to downsize,” he said. “But I’ve also seen other companies in the medical industry beginning to expand operations and looking for a larger footprint.”
There is also the freelance economy – otherwise known as the 1099 economy, the on-demand economy or even the sharing economy.
A 2015 report from nonprofit organization Freelancers Union and Elance-oDesk Inc., a company that provides platforms for freelancers to find work, revealed that 53 million Americans qualify as freelancers. Some 34 percent of U.S. workers lists themselves as independent contractors.
Of the more than 1,000 American workers surveyed, 60 percent of them said they received 25 percent or more of their income from freelance work.
What those freelance workers call an office ranges from the home to the neighborhood coffee shop, library or even a hotel room while on vacation. Workers who gravitate to the freelance work style also tend to have their own unique makeup.
“Freelancing is growing because people are recognizing their own power, and if used correctly, they’ll be invincible,” said Lisa Mac, who started the co-work space Studio688 in Memphis earlier this year. “I’m an artist, and if I was put in a 9-to-5 box being under someone’s thumb, it would be detrimental to my creative brain. People being able to do their own thing online, it empowers them to be able to work on their own. I’ve noticed with writers, it’s difficult to work under someone’s direction. The way we work … we don’t leave our bed all day. We have our laptops with us working all day.”
If there are 53 million Americans working as freelancers, that’s millions of cubicles and offices that aren’t necessary. And vacant workstations could mean a need for less space.
Cushman & Wakefield/Commercial Advisors’ 2015 Mid-Year Market Report for Memphis suggests office activity is doing well. The six Class A buildings in the East submarket are 99.3 percent occupied, and the $26-per-square-foot asking rents are approaching the 2007-2008 pre-recession levels.
But not everything performs as well as Class A properties in East Memphis. The overall office vacancy rate in Memphis is 17.8 percent. Companies are filling the Class A spaces but leaving others vacant.
Even traditional office settings are seeing employees working from home more than what previously has been allowed.
Could there be an impact from the freelance economy, or at least a lingering effect from corporate downsizing over the past eight years?
Kemp Conrad, principal of Cushman & Wakefield/Commercial Advisors LLC, said technology advances make it all too clear that users will continue making adjustments to work arrangements, whether it’s downsizing space or encouraging employees to work remotely more.
“Fortunately, with a rare exception here and there, we have not seen users giving back space en masse,” he said. “That said, we do expect smart users to continue to maximize space efficiencies through telecommuting, flexible work arrangements, hoteling and maximizing space to also create culture.”
Evans said the past seven years has taught office users lessons about how to better operate while maximizing cash flow. In turn, it’s bringing new opportunities to the market.
“What companies and investors learned from the Great Recession of ’08 was to build up greater cash reserves,” he said. “The rebuilding of the commercial market was extended based on this principal. Now that companies and investors alike have adjusted reserves, they are re-entering the market looking for the best option to benefit their short- and long-term strategies.
“This new confidence in the marketplace is pulling down the vacancy rates and making it opportunistic for not only owners and investors, but beginning to open the door for developers to come back into the market.”
One thing that might be in the favor of keeping vacancy rates low in Memphis is the traditional makeup of the city, from home décor and design to how the workplace is set up. But there are pockets of nontraditional users, and freelancers and contract employees are gravitating to them.
At Studio688, freelancers can rent desks and have equipment provided to better start a business. And while some freelance workers are better-suited for independent work situations, it can be helpful to be involved in a community setting. So the traditional office isn’t completely dead for them.
“As freelancers, we have to be creative about how we build our businesses,” Mac said. “Every freelancer is different and their needs are different. We look for people who are a good fit. We have a freelance blogger, a Web designer, videographer; we like to look for people who can broaden what we can do as a team.”