June 22, 2023 by Dymphna

WFH is dead and what that means for property

Work from Home was one of the big themes of Covid, but it looks like going the way of Covid too.

So the rise of Work from Home was one of the big trends of the pandemic, and it had a big impact on the property market as everyone suddenly needed more rooms and more space.

But, it looks like it’s dead.

Not totally. But the coffin sure looks like it’s on the way down.

And we’ve had all your celebrity companies – Amazon to Tesla – call their employees back to the office. But I thought that was just because of all their legacy systems or something.

But no, the big money in silicon valley now says that remote working is uninvestable.

Last week, Keith Rabois, a general partner at venture capital firm Founders Fund, that they would not invest in a startup centred on remote work.

That just don’t believe it works.

Even Silicon Valley poster boy Sam Altman (the guy behind Chat GPT) reckons work from home was all a mistake.

“I think definitely one of the tech industry’s worst mistakes in a long time was that everybody could go full remote forever, and startups didn’t need to be together in person and, you know, there was going to be no loss of creativity,” he said at a Stripe event in San Francisco.

“I would say that the experiment on that is over.”

Yep. If even tech can’t make it work, then there’s no hope for the rest of the economy.

But it did work for a while, didn’t it? During the pandemic we all adjusted and it seemed to flow ok?

So what happened?

Well, Paul Graham, who cofounded Y Combinator in 2005, reckons it was because WFH was built on existing cultures that were built with in-person work:

“Partly I think because remote work does work initially, if you start with a system already healthy from in-person work…and partly because it seemed to solve recruiting, which is always a bottleneck.”

WFH works for a while if you have successfully built a corporate culture to begin with. But you can’t start with WFH. It just doesn’t seem to work.

And the evidence does look like it’s in. Kevin Drum summarised all the available evidence to date. He reckons there’s four problems that are emerging:

  1. remote work is bad for new hires and junior employees,
  2. even workers think remote work causes more problems than in-person work,
  3. remote workers put in 3.5 hours less per week compared to in-person workers,
  4. anecdotally, HR software app Bambee’s CEO says production drops 30% on days when everyone is working remotely.

That’s not a good list. I mean, if even the workers themselves are struggling with WFH, what future is there for it.

So that means the tide will reverse. Perhaps slowly, but also perhaps fully in time.

That means the reversal of some key Covid trends, namely a recentralisation back to the major centres, and a downsizing of household space requirements (good-bye home office.)

I expect this will play out much more slowly than the sudden changes that Covid forced on us. But it will happen.

WFH’s days are numbered.