Out With the Old and In With the New: How the Gig Economy is Reshaping Real Estate

Cushman & Wakefield recently took a poll of people’s satisfaction with their job and found a staggering 80% of people are dissatisfied with their current job. Why is this? Most office spaces today do not accommodate the human element into their spaces. This is increasingly relevant as the gig economy of free lancers, tech start-ups, consultants and temp workers grows. Currently, the gig economy consists of about 20-30% of our global workforce or about 162 million individuals. This emerging sector is leading to changes in demographics, technology and economics occupiers and landlords have created a positive tension between themselves allowing for an innovation of spaces.

Employers are realizing the value of hiring employees on an as-needed basis. The employers win because they do not have to carry another salary wage, and employees win because they choose their hours and in most cases, their location too. This “everybody wins” scenario is gaining popularity and changing the way we think about downtown locations, as this is the most popular breeding ground of new businesses and commerce.

There are drawbacks of temporary work, such as lack of job security and healthcare benefits. However, these drawbacks are not enough to eclipse the growing gig sector. It is projected that by 2020, the gig economy will consist of up to 40% of the world workforce. Another contributing indicator from a Cush-Wake poll found 70% of millennials reject the idea of traditional employment and would rather work independently. The huge driving factor is hand-held devices, tablets and smart phones. According to The Economist, the accessibility has never been easier and continues to flourish with a projected 80% of individuals will have a smart phone by the year 2020. Keith Knutsson of Integrale Advisors claims the “globalization of work, global trade, and technology shifts have contributed to the rising gig economy.” Furthermore, in the past three years there has been more information recorded than in the entirety of humanity, confirming the gig economy is the way of tomorrow.

Stepping away from the traditional workplace and redesigning office spaces to maximize the efficiency of the space is the goal in mind for tenants and landlords alike. Employers are taking action as 30-50% of their workforce are not actual employees. Firms are adapting by creating open collaborative spaces, ultimately reducing the rent bill by providing less space per worker. The gig economy has opened doors for new market sectors to fill tenant vacancies in office spaces. Companies such as WeWork, Regus and LiquidSpace are examples of co-working office spaces that caters to the vagabond worker. These platform companies have emerged with dominance, operating in 900 cities worldwide, nearing 100,000 locations.

Now is the time for Commercial Real Estate (CRE) executives to act as 65% of today’s school pupils will be performing jobs that don’t even exist yet. To remain competitive, it is pertinent CRE executives cater to these future needs. Staying on top of technology innovation will appeal to this generation of worker. Equipped with this information, businesses can continually redesign work spaces that break down barriers between people and technologies, empowering their employees to be prolific, despite their location.