The Future of Work: Impact of Gen Z's Preference for Flexible and Hybrid Models on the Office Market

The new generations of professionals, such as Generation Z, are transforming how we work, preferring flexible and hybrid models that challenge traditional work structures. This change is impacting both companies, which are adapting their operations, and the office real estate market.

Tiago Alves is the CEO of IWG in Brazil. Photo: SiiLA.

By: SiiLA News

03/28/2024

The labor market is undergoing significant changes driven by a new generation of professionals with demands that challenge traditional structures. According to the research "The Future of Work: A Trends Forecast for 2023" conducted by IWG, Generation Z, which will soon represent more than a quarter of the global workforce, prefers flexible and hybrid work models.

The study shows that 85% of these professionals prefer offices close to their homes. This growing trend is reflected in how companies operate, with the adaptation of models such as "hub and spoke," which involves reducing the size of central offices and incorporating offices closer to employees' residences.

In this regard, IWG's "Workation" report states that 71% of workers would consider changing jobs if the offer included the flexibility to work in a hybrid manner. Likewise, the study indicates that the new generations of professionals desire greater job benefits, including more extended vacations (30%) and more time off to enjoy with friends and family (52%), as well as a better work-life balance (76%).

Labor Changes and Their Impact on the Real Estate Market

The labor demands of the new generations of professionals are reshaping the labor market and, consequently, the office real estate market. In this regard, data from IWG's "The Future of Work: A Trends Forecast for 2024" study indicates that 75% of CEOs expect their companies to continue operating with hybrid work models over the next five years.

Tiago Alves, CEO of IWG in Brazil, believes hybrid work is one of the main labor megatrends for 2024, providing benefits such as increased employee happiness, improved productivity, and greater talent retention and attraction.

"With hybrid models, professionals can adjust their work to their lives, even reducing the need for long daily commutes. Offering the option of hybrid work is an important and simple way for companies to show they care about their employees. This gives them more control over their schedules and more free time. Companies that adopt hybrid work perceive a healthier team and a more committed and productive one," says Alves.

For 2030, IWG projects that 30% of the global commercial real estate market will comprise flexible workspaces. In this regard, SiiLA data indicates that flexible office models have been expanding in Latin American countries like Mexico. An example of this is coworking spaces, which until last year were the third most important tenant in terms of occupied square meters nationwide, only behind the finance and public administration and services sectors. Additionally, SiiLA Market Analytics data indicates that between 2019 and 2022, the number of companies offering coworking services in Mexico increased by almost 30%, especially in high-quality spaces (classes A+ and A), representing about 90% of their gross leasable area.

To learn more about office market trends, explore SiiLA REsource or contact us at contacto@siila.com.mx.

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