The Hybrid Future

Hybrid working has revolutionised our perceptions of where and how work gets done. But one thing is clear, it’s here to stay – embrace it, or risk being left behind.

In March 2020, organisations across the globe scrambled to implement reactive, remote working procedures, upending business operations and transforming employee experiences. This action changed almost every knowledge worker’s perception of where work could be done. But what next? What is the impact on employers, employees and wider society as executive boards navigate ‘return to office’ memorandums?

Hybrid working (the flexibility to work from home or the office) is not new. It was not a result of the global pandemic. Select groups of knowledge workers have been working in a hybrid way for decades, choosing locations based on their work at that point. Perhaps governed by seniority (a privilege of rank), or because their role was inherently multilocation, hybrid working practices had been tried and tested long before Covid-19 changed lives.

But in the March 2020 crisis response to Covid-19, mobilising millions more knowledge workers to leave their offices and set up ‘shop’ at home, the hybrid genie got out of their lamp. And they are not going back. Previously desk-bound employees found new freedom to balance their days in a new and welcomed way.

As Covid-19 is now considered endemic, and organisations are assessing their people and place strategies, new tensions and questions are emerging. Has innovation slowed? Has knowledge transfer been hindered? Is hybrid putting the brakes on career progression? And what do fewer employees commuting to cities and working in offices mean for the supply chain supporting those offices? What are its long-term effects on people, places and society?

‘The Hybrid Future’, a study led by Leesman in collaboration with MIT’s Center for Real Estate, digs deep into the impact of hybrid working on office culture and surrounding infrastructure.

“It is an end-to-end study of people’s behaviours and attitudes. We want to look at a whole new raft of issues. From where employees base themselves, to how often they socialise with colleagues, where they go for lunch, do they use the dry cleaner near the office, how far do they commute, and whether those commuting patterns change with the seasons,” says Leesman Founder & CEO, Tim Oldman.

Both Oldman and collaborator James Scott, Lecturer, and Research Scientist at MIT’s Centre for Real Estate, believe that hybrid working’s transformative impact stretches beyond the office and extends to city economies. But presently, such theories are based on observation, not in-depth assessment. “It is important to say that we don’t know what will happen,” explains Scott. “This piece of work [The Hybrid Future] is a journey. It is an infinite game aiming to better understand what life in our cities will look like in the future.”

An exchange between Oldman and Scott produced crucial insights on the current and future effects of hybrid working, including its immense staying power and the consequences of its mismanagement.

“Hybrid working is here to stay. It is not going back in the box,” says Oldman. “The past three years proved it works. Nothing broke. There were no meltdowns. But what it did show was that the ecosystem supporting our workplaces suffered. And it is still suffering. The question is not about hybrid working but what commercial real estate and workplaces are doing about it. Are they prepared for the future of hybrid working? Have they even noticed the ripple effect?”

The ripple effect refers to the notion that the impact of hybrid working extends beyond the confines of a workplace’s physical boundaries and encompasses the broader ecosystem or environment it operates in – including transportation, city amenities and surrounding businesses.

Undoubtedly, city centres are not back to being fully operational and may never be. In response, many customer-facing companies stepped up and changed course to offset the quieter streets. Sandwich shop franchise Pret a Manger, a popular destination for city workers, has recently seen a significant change in operations, closing early on Mondays and Fridays. To adapt to the changing landscape, the company is expanding its digital and delivery capabilities while shifting focus away from urban areas.

As part of this effort, new shopfronts have opened in London suburbs like Twickenham to attract clientele on the days they tend to be at home – Mondays and Fridays.

According to Scott, the Pret a Manger experience is merely the tip of the iceberg in what could be a major cultural shift brought on by hybrid working.

“The reality is so much more, with significant potential consequences affecting a number of different asset classes. We need to start figuring out what is really happening in order to protect, or in some cases reinvent, the vibrancy, energy and experience of our downtown neighbourhoods.”

Down but not out – After it filed for bankruptcy in 2013, Detroit became a prime example of a broken city. Since then it’s resurgence has been slow but steady after swathes of private investment.

There already exists a case study of a city’s soul destruction and rebirth. In its heyday, Detroit, Michigan, was a booming industrial centre in America’s Midwest. The city, also known by the moniker Motor City, was once home to all major American automotive brands at the turn of the century – a trend started by Henry Ford who opened Ford Motor Company in Detroit in 1903.

Several decades later, the decentralisation of the automotive industry began its slow erosion. The Detroit Big Three (Ford, Chrysler, and General Motors) established factories worldwide and relied less on Detroit as a production hub. As time passed, Motor City became a prime example of a shrinking city; without the lure of large manufacturers, job seekers and the middle class moved to the suburbs and beyond, leaving behind poverty and vacant skyscrapers.

By 2013, Detroit filed for bankruptcy, the largest municipal bankruptcy filing in history, with an estimated debt of $19 billion. Since then, development has been slow but progressive, with downtown Detroit seeing a resurgence after swathes of private investment and nearly 708 new housing structures built by 2019.

In 2020 Ford Motor Company introduced a 30-acre site plan for Michigan Central, a massive development inspired by community need. The plans include the rebirth of Michigan Central Station, which had fallen into disrepair.

Michigan Central is a shining example of people-driven city revitalisation, but it was a long time coming. If time is of the essence for major city economies like London’s, then the current strategies used by commercial real estate aren’t good enough. Their strategic direction “hasn’t changed in all of the time that I’ve been around the real estate industry”, says Oldman.

The refurbishment of the ExpressTram at Detroit Metropolitan Airport’s McNamara Terminal was a part of Detroit’s 2019 resurgence. The driverless system, operating within the terminal building, is the first of its kind.

At the end of 2022, a Leesman sample of 30,000+ globally distributed employees revealed that 41% of respondents intended to be office-based one day per week or less, a 5 per cent jump from the beginning of 2022.

For Oldman, the root of this problem is not due to the need for building renovation but rather a lack of imagination and empathy towards employees’ desires.

“What makes us nervous is what workers’ behaviours mean to the wider workplace environment. When an employee’s home supports their work better than the office they are being told to return to, we have a storm brewing. The real estate industry must accept that its product is under new scrutiny, and if it doesn’t work for the employee, it must change. If it doesn’t change, then it will put employees and employers at odds.

“If 41% of employees stay away from the office four working days out of five, that’s billions of square feet of office space sitting unused. Corporate employers can’t sustain that. So, these corporations will dump it or look for new solutions that address employee needs and magnetise them back. But so far, there is little evidence of that happening. We may be over-dramatising it, but we fear for commercial real estate. And it feels like we a are the only ones seeing it as a real possibility.”

A black swan event is a rare and unexpected occurrence that can bring significant societal changes. Well-known black swan events include the 2008 subprime mortgage crisis and the rise of the internet.

Regarding real estate’s black swan, Oldman and Scott fear a huge reduction in its corporate footprint, leading to a dispersion of urban development into surrounding suburban areas. Much like Pret a Manger’s model and Detroit’s urban exodus, this could mean more clusters of high performing workplaces or the development of smaller, focused centres.

Oldman argues that the ‘homification’ of work (the act of decorating an office to make it more like a home) gives employers a chance for bolder action. “Like Haleon, GSK’s de-merged consumer health division, which is building a new UK headquarters in Weybridge on the very south-west fringes of London’s commuter belt. This sets a precedent for other corporates,” says Oldman.

Ultimately, these changes will significantly affect how we live and work. From Oldman’s standpoint, we could be forced to adapt to and navigate the uncertain terrain of a world; where the employed masses don’t need to commute, skyscrapers are merely decorative, and the best place for a coffee is far away from a once vibrant metropolis.

Yet, both experts believe prevention is possible, and a different mindset is needed from real estate leaders to offset a black swan event and bring offices and cities back to their previous prominence. In other words, both may not be dead but need reinvention. The question that warrants asking, says Scott, is, “how do we make hybrid workers feel better about the city?

“Right now, I believe we need to focus on the workplace experience. Key decision makers need to look at the factors workers are using to make their decisions and base solutions on the Leesman ideas of ‘Purposeful Presence’ and ‘Hotelification’. A different mindset is needed, building on the evidence this project can offer them. A deeper understanding, based on data and market intelligence is needed – now is the time for The Hybrid Future research.”

Oldman and Scott have multiple hypotheses in play that the study will explore. From how a new aversion for the commute may dramatically inflate the value of commercial properties within a 15-minute walk of a city’s mainline stations, to the particularly acute challenges of the business park.

3 years
24 pulsed questions
10,000 participants

The Hybrid Future will be bringing together an exclusive worldwide network of organisations and individuals. If you want your company to be a part of the definitive investigation into the impact of hybrid working on people, places and society, get in touch.

The Hybrid Future
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