Living Anywhere: COVID Changing the Way We Think About Real Estate
The coronavirus accelerated a "work from anywhere" revolution faster than anyone anticipated. This has significant implications for the real estate market. Employers and workers are embracing the freedom of where to live and work; and if that trend holds, a shift in real estate demand will occur on a global scale.
Investors sense an opportunity to buy/relocate in areas away from the urban office. With millions of workers now given the choice of where to live - the migration trends will be towards lower cost, safer and potentially more exotic, lifestyle-rich communities. As the tide shifts from expensive, dense urban cores, a flood of capital is expected to wash over places that were already garnering visits from digital nomads and the like.
The remote work revolution has already transformed the way we think about real estate and the possibilities for living: the telecommuting workforce has grown by 140% since 2005, nearly 10x faster than the rest of the workforce. However, the worldwide pandemic has hyper-accelerated everything. A spike in demand in less-urban, lower cost, amenity-rich locations both home and abroad will continue to accelerate.
New York City is experiencing the loss of hundreds of people a day. Smaller towns will reap the benefits of this shift. A small town in Northwest Arkansas called Bentonville is one of the fastest growing regions in the country. Offering safety, good schools, lower cost of living and an array of outdoor and cultural activities.
Stephanie Strasnick, a digital marketing consultant in the art industry, was living in New York City for the past 10 years. Last month, she uprooted and made the move to Bentonville, population 50,000. She moved into a master-planned community near restaurants, mountain bike trails, farm to table food options, and nearby lakes and art museums: "Life is just easier here than in New York City. If there is a second wave of the virus, I feel like I'm in a safer place, having more space and so many outdoor amenities to enjoy on a day to day basis." Stephanie's experience is that a New Yorker can move to Bentonville, continue to work, and enjoy an enhanced lifestyle at a more affordable price.
The ability to work remotely creates a significant economic shift in real estate demand, and a place like Bentonville and other similar towns will continue to gain momentum.
Moving the Home Office to the Beach
For generations, Americans have dreamt about lower cost real estate options in exotic beach locations. This option was formerly reserved for a second home or retirement destination buyer, but now, this option is possible for younger millennials with newfound flexibility.
Foreign resort communities in exotic places are attracting buyers looking for a more affordable lifestyle in an ideal, amenity-rich setting. Companies like Dekel (a Panamanian real estate company) have leveraged their real estate offerings to capitalize on the "working from anywhere" revolution. Having built a number of mixed-use residential resorts in tropical beach locations, they offer beachfront condos from $249,000 at a resort community in Panama called Blue Venao.
With the adoption of applications like Zoom and Google Meet, employees can seamlessly collaborate from anywhere in the world. This powers the notion that work is where you want it to be, especially as expensive super star cities like San Francisco and New York City lose their luster. Live in paradise, keep more take home pay, and perhaps pick up a new foreign language along the way...on a beach in Panama for instance.
For Dekel, building resort communities in Panama is about offering a lifestyle that recharges and inspires the worker. In this way, living on the beach is seen as an enhancement to productivity--not a distraction. Employers are expected to become more and more comfortable with remote work supported with evidence of increased employee productivity (even as their employees go surfing during lunch breaks). This all can be viewed as a powerful shift in the workplace with a direct impact on real estate trends -- enabling people to work where they want while still being productive. Investors take note.
An exotic beach in paradise is going to be extremely attractive at a fraction of the cost of living in an overpriced condo in Seattle or D.C. Dekel is betting this revolution could potentially turn the corporate real estate world on its head.
The Emergence of the Shared Economy in Real Estate
Another trend that has accelerated due to the Pandemic: a mobile lifestyle among second homebuyers and owners. The rise of the digital nomad, an idea once confined to a younger demographic, has shifted to co-opt that mid-50 professional. Home exchanges are exploding in popularity. Affluent homeowners that used to enjoy the status of hanging out at the local country club in the 80s and 90s, are now preferring lifestyle experiences in multi-dimensional locales over a single static residence.
Elite Alliance, a real estate and hospitality company based in New York, has built an exchange network of 130 upscale resort properties around the world. A vacation homeowner can place their home into the portfolio and gain access to iconic destinations in stunning resorts: Cabo, Italy, Telluride, Bermuda, Florida Keys, Morocco, Greece and more - thus maximizing the utility of their vacation property. Developers are using this concept and offering real estate with a membership to access the network of Elite Alliance properties when an investor buys a vacation home. "Affluent vacation homeowners are much more comfortable sharing their residence today than when we first started the luxury exchange program 15 years ago," says President of Elite Alliance, Rob Goodyear.
This exchange/sharing concept will grow in popularity as affluent buyers value experiences over status more than ever before.
The Future of Real Estate is the Future of Lifestyle Investing
Not all businesses are going fully remote right away - workers may work from home, but the boss may want to meet in-person regularly. Either way, there's a great deal more flexibility on the horizon, and places like Bentonville, Blue Venao, and the Elite Alliance Home Exchange are well positioned to capitalize on these trends.
The truth is, many new real estate options are already harvesting the benefits of remote work. According to GlobalWorkplaceAnalytics.com, approximately 20-25% of the workforce teleworks at some frequency, and 4.3 million employees work from home at least half the time. Again, the pandemic will significantly increase these numbers, and the phenomenon of the rise of the digital nomad is predicted to continue to grow exponentially.
So, while it may initially seem like a giant step to abandon the status quo of traditional real estate offerings in traditional real estate markets, new realities are in play that pushes the future forward at an ever-faster pace. Moreover, it is happening on digital platforms that allow for rapid adoption and velocity even if real estate is a brick and mortar business. This quickening pace is due to consumer driven demand from the massive existential shock that has upended expensive "work based" cities. To be on the front end of this curve is exciting and liberating. It gives the consumer unprecedented choices in where and how to live.
We may all be living on the beach or in some rural mountain town sooner than anticipated.