Education and Office Trends Affecting Real Estate - Class 2

Education institutions are themselves reacting to the changes in technology as well as changes in consumer habits which have had a positive and negative impact on real estate. Things such as online classes and charter school are challenging the traditional idea of a school. In most classes, students no longer need to be physically present in a class room thanks to online schooling. However, how does this change affect real estate and the education students are receiving? Does online schooling share the same prestige of attending class?

As more colleges adapt to the online world, it allows students to ‘attend’ class in the comfort of their own home. Social networking allows students to communicate about class and assignments and even be assigned homework from professors. As more freedom is granted to students, the need for large college campuses comes into question. Most colleges are treading lightly since there are perceived negative aspects to online schooling.

Many will argue that social interaction and human contact will be the most affected. There is something about being in a room of 30 of your peers discussing a subject that you would not get by just reading lecture notes in your robe at home. Human interaction creates deeper thought and debate you otherwise would not have. Additionally, online schools have a negative connotation in the workplace. Some recruiters simply toss out resumes with University of Phoenix, the most widely known online school, listed in the education section. This perception will need to greatly change before online schooling has a large presence.

Another change is education is the upswing in charter schools and technical institutes. These organizations are taking a different route all together and getting away from traditional schools and campuses. Charter schools are notorious for leasing office space or converting other buildings, such as grocery stores, into schools. Technical institutes are more prevalent as an office tenant or even owning their own office building.

Changes in unemployment are probably the greatest factor when it comes to real estate. Real estate is almost completely driven by employment. Any significant change in the unemployment rate affects the demand for office space as well as consumer spending which will impact the retail sector. One impact from the recent recession is that employers have adjusted to smaller spaces and fewer employees. They essentially trimmed the fat and for, the most part, kept it off.

Another change in the office environment is the impact of telecommuting. Employees are spending less time in the office and more time in their car or home. This change decreases the need for large office spaces. A new emerging trend is the advent of pay-as-you-go office rental; mentioned in my previous post as well. Basically, employees or small business owners on a low budget can rent a shared office for any desired amount of time such as a month, a week or even a few hours. They are also allowed access to such amenities as a conference room or break room. They are similar to executive suites but allow for shorter rentals.

These changes are affecting the design of office buildings as well. Companies are getting away from the large executive corner offices which are seen as a waste of space and resources such as rent. Many companies are moving to office cubicles and an open office environment with no walls or partitions. Employers are also installing plug in stations for their traveling employees who only require a few hours in the office a week

It’s evident again the real estate environment is changing and reacting based on actions of other industries.