Working from home (WFH) isn’t some unique idea that just recently appeared. Telecommuting has been around since we’ve been able to communicate and conduct business at a distance. But, its recent explosion in popularity — whether that be out of necessity or ability — is striking. In fact, we’re currently in the largest work-from-home experiment in history.
In recent months, trends in Google searches for terms like “work from home” have spiked in popularity to the highest levels recorded since at least 2004. Interest in search terms is quantified by Google Trends using a scale of 0 to 100. The higher the number, the higher the interest, with 100 signifying peak interest in that term.
Google Trends Shows Spike Across U.S.
In particular, the trends for the term “work from home” in California, Washington, New York and Texas show how much of an influence the pandemic is having across the nation.
Washington state, which confirmed the first case of COVID-19 in the U.S. on January 20th, registered the highest popularity reading in our study on March 5th. With 70 cases of the virus reported at that time, residents started looking at working from home as a definite possibility, if not a necessity.
But it wasn’t just Washington. Indeed, the nation started taking this seriously with a noticeable uptick in searches beginning in early March. As news traveled, cities around the globe started taking various measures to slow the spread. We can see a general rise and fall across the country for the search term, but the trend is, undoubtedly, upward.
But working from home is not a new phenomenon. It’s actually been expanding across the nation — and the world — for years.
Colorado: Largest Percentage of WFH Workers
We compiled data on working from home from the U.S. Census Bureau. Specifically, we compared how the millennial cohort especially is adopting and transitioning to working from home and which professions were most common for WFH from 2014 to 2018 in all 50 states. Of the total U.S. labor force, 4.49% were working from home in 2014. Four years later, that number had increased to 5.34% — representing a total of 8.25 million people working from home.
The map below breaks down these statistics by state. Hover over the states for more details.
Colorado leads the nation with the highest percentage of WFH jobs at 8.56% — representing more than a quarter of a million people. Not far behind, 7.46% of the workforces in Vermont and Oregon have WFH jobs. However, in Vermont, that represents just over 24,000 workers, while in Oregon it’s nearly 150,000. California has the largest labor market, so it makes sense that it also has the largest absolute number of people working from home in the nation — more than 1.1 million, or 6% of all jobs in the state.
Fastest Growing WFH Workforce: South Carolina
The vast majority of jobs in the country are in a relatively small number of states. We took the top 20 states by workforce size and identified how WFH evolved between 2014 and 2018. In all cases, the number of people who worked from home increased at least 29% over that time period.
South Carolina experienced the largest growth in working from home with an increase of 58% in just four years. It was followed by Colorado, Nevada, Utah, Texas and North Carolina, all with growth rates greater than 40%. In most cases, the professions that experienced the most WFH growth were professional and scientific services, which management and administration fall under.
Millennial Remote Workers: Built for This
Millennials were built to work from home — maybe not as much as Gen Z, but Millennials are internet natives, nonetheless. So, it comes as no surprise that Millennials are the fastest–growing generation that’s working from home. Nationally, 4.61% of Millennials worked from home in 2018.
The interactive chart below shows the share of working Millennials that work from home in each of the previously listed states, by year. You can switch years using the tabs above the chart.
From 2014 to 2018, roughly 2,600 Millennials started working from home in Alaska and more than 17,000 in South Carolina — registering an increase of 67% in both states. Similarly, Louisiana, Nevada, Oregon, Utah, North Carolina, Tennessee and Colorado jumped by more than 50%. Notably, Utah also has the highest share of Millennials working from home at 7.68%, followed by Colorado at 7.4%. Surprisingly, Millennials in Oregon, which has the 30th largest workforce of the 50 states, have 7.1%.
Beneficial Trade-Offs of WFH
If more people are working from home, that means fewer are spending time in traffic every morning. So, how many hours per year could we save? Obviously, it varies by state and even city, but it works out to quite a lot. Think about your job. If you didn’t have to commute, how much time would you save? We broke it down by state averages.
But, saving time isn’t the only factor that affects your work-from-home experience. We’ve also included internet connectivity by state to see where access is optimum for internet–heavy activity. You can also check out the top cities for these metrics, as well.
The Future of WFH is Wide Open
Intuitively, all of this makes sense. Our interconnected world is increasingly allowing us to conduct more and more business virtually. Conferencing technologies like Slack, Zoom and Microsoft Teams make managing teams, clients and projects extremely easy. And, right now, we’re experiencing just how far we can push these technologies.
Interestingly, hardship has a way of breeding innovation and creation. Looking forward, it’s not hard to imagine a world that emerges from this crisis as increasingly more anti-local — further expanding the classification of traditional work-from-home jobs. As a result, we may start seeing occupations that had previously been dependent on physical presence begin to shift toward the comfort of your own home.
Keyword research from Google Trends.
All data obtained from U.S. Census Bureau 2014 – 2018 ACS – Means of Transportation to Work by Age.
“Millennials” defined using age range cohort 25 to 44.
All forms of commuting were used to calculate commuting time, including: car, public transit, biking, and walking.
The number of paid internet subscriptions by total number of households was obtained from the U.S. Census Bureau, 2018.
For our latest interview in the Expert Insights series, we had the pleasure of talking to John Gilchrist, Founder of ATALYST. Mr. Gilchrist has over 25 years of experience in banking, real estate, and accounting and has worked for public and private multinational firms and has experienced success as an entrepreneur.
He began his career as a certified public accountant with Arthur Andersen where he specialized in the real estate and communications industries. After that, he joined Star Telecom where he was promoted to the role of Chief Financial Officer of European Operations. Mr. Gilchrist later transitioned to banking when he joined Lehman Brothers in London, where he specialized in cross-border merger and acquisition advisory, capital raises and debt restructuring. Read on to find out more about his experience and thoughts on the CRE industry.
Q: Can you tell us about your background and why/how you chose a career in CRE?
My grandfather developed a retail building and an industrial building in the 50s. He lived with us during my formative years, so I have always been around the CRE space. I planned to work in CRE industry straight out of college. I even did a college internship with a multifamily operator in Orange County one summer. The nation was just coming out of the 90-91 recession and still dealing with the hangover from the S&L crisis, so the CRE space was incredibly challenging in those years. As a result, I shifted my focus to accounting. I earned an undergraduate degree in accounting from USC in 1993 and a master in business taxation in 1994. I was recruited directly out of school to work for a big six accounting firm, Arthur Andersen. At Arthur Andersen, I navigated to a team that covered real estate companies and REITs. Eventually I took an investment banking job with Lehman Brothers where I expanded my transaction execution capabilities. Now with my own company, I’ve been able to combine the skills learned throughout my career and apply them to an industry that I’ve always wanted to be involved in.
Q: What are your thoughts on the CRE market in the U.S. today in terms of trends and challenges?
There are so many factors playing into the markets today, it is difficult to nail down just a few issues a concise manner.
The COVID-19 Virus is going to dominate the headlines for the remainder of 2020. The prevailing thought is that we have to get back to normal quickly or the entire system will fail. A drawn out quarantine will lead to massive commercial mortgage defaults. Even with modest leverage, CRE owners will need reprieve. This is easier said than done. Agencies are responding with programs that offer forbearance, so long as certain conditions are met. The CMBS market has yet to come up with any type of solution through the time of this writing, so borrowers are anxious. Generally, new financing and refinancing has ground to a halt. Our understanding is that the stimulus is directed to retailers and business owners. So long as they obtain the stimulus and use it to pay rents, owners should be able to pay outstanding mortgages. This is the best way to avoid a complete meltdown of the financial system.
Before COVID-19, CRE owners the CRE industry has been quite frustrated with new regulation (e.g. rent control, occupancy mandates, alternative energy mandates) and increasing government impact fees. This ties into affordable housing that is one of the hottest topics of discussion in most cities. The problem of affordable housing is a difficult one to solve with many important stakeholders. Many people immediately look to developers to cut rents or sales prices, however we see developers building at historically low margins already. The public needs to understand that prices have increased in part due to higher labor and material costs, building restrictions, government impact fees, and other government mandates. Each situation is specific and local, but there needs to be a balance that allows a developer and investors to make a reasonable profit or all new development will stop and the problem of affordable housing will get worse.
Changing consumer behavior has led to a radical change in retailing and warehousing across the globe. Practically everything imaginable can be delivered directly to the consumer, which has reduced the demand for retail for the foreseeable future. Repurposing the excess retail space will be one of the challenges and opportunities in the upcoming years.
Q: What differentiates the commercial real estate market in Austin from other major markets in the United States?
Real estate is a local business and each market has its own story. Austin is likely the best market in the country for growth opportunity. It is differentiated from other markets because the job growth in Austin is associated with higher paying technology jobs and its overall affordability relative to other technology focused cities. We expect a continuation of the incredible growth trajectory in this market.
Q: How have you seen the industry evolve in the past 25 years you’ve been involved in it?
The biggest change to the CRE business has been driven by changes in technology. Advances continue to change the way people interact, which in turn changes overall real estate needs. This disruption will continue. By way of example, the entire country is telecommuting in response to the COVID-19 lockdown. Space needs for corporate offices had already been reducing, but I expect they will reduce further and telecommuting will increase. Also, banks are shuttering local branches by the hundreds because of the advances in internet banking. I previously discussed how the retail markets have changed with the availability of online commerce.
Q: What is your general assessment for the real estate market in 2020? Have you spotted some interesting market trends?
Interesting market trends include the repurposing excess retail space, an expansion in seniors housing to meet expected increases in demand for aging seniors, and the growth of the for rent housing market.
Q: Do you think there are some lessons from the past few years that you would impart as an absolute must for those looking to get into the CRE industry?
For those looking to get into the CRE industry, I highly recommend that they get involved with some of the industry trade organizations. Many have fantastic training programs and provide valuable industry information. I’m active in Urban Land Institute. Other leading groups include NAIOP and the Mortgage Bankers Association.
Q: Any other insights that you’d like to share?
Capital raising for projects can be challenging in good times and bad times. Our clients leverage off of our experience and relationships to secure the best deals. We have an extensive network of capital sources including mortgage REITs, Wall Street CMBS investment banks, debt funds, domestic and international commercial banks, hedge funds, life insurance companies, and private funds. These sources are capable of funding equity, mezzanine, construction, short and long term debt thus allowing us to arrange all of the required capital for clients.
Over the years we have not only financed the traditional real estate asset classes such as multi family, office, retail, hotels, and industrial but also senior living facilities, land, self-storage, residential development and master planned communities.
STORE Capital Corp. (NYSE: STOR) President and CEO Chris Volk said the industries represented in the net lease REIT’s portfolio will remain relevant in the aftermath of the coronavirus crisis.
Speaking on a March 31 investor call hosted by Raymond James, Volk added that “as the recovery ensues, the middle market will be rebounding strongly and there’ll be amazing opportunities for STORE to grow.”
In the March 30 edition of the REIT Report podcast, Nareit Senior Economist Calvin Schnure highlighted the latest developments in how the coronavirus crisis is impacting the economy and commercial real estate.
Schnure noted that public health officials are indicating that “we need to prepare for a long haul,” which in turn is increasingly impacting cash flows for businesses and wages and incomes for workers.