Remote work a threat to downtowns, housing sector, Baker says

Many employees have returned to in-person daily grind more than two years after the Pandemic, but economic impacts will be significant if even a fraction of the workforce continues to embrace hybrid or remote models.

Baker made his latest pitch for passage of a series of spending packages he said would help Massachusetts navigate a changing employment landscape while linking an evolution in work patterns to the future of downtown spaces and to the “existential threat” posed by a broken housing market.

The state has done a good jobbouncing back from the worst stretches of unemployment during the public health crisis, said Baker at the New England Council event.

Baker said soaring inflation and “churn” in the labor market will pose challenges for employers and policymakers. He argued that even a small group of employees opting against commute would represent a critical mass.

Baker said that they don’t have to be half of what everyone else does. “They don’t have to be a third, but if it’s 25 percent of what everybody does, the consequences are pretty significant in a lot of ways.”

Employees who have access to remote options may see benefits such as more flexibility for family care or reduced travel expenses.

The trend could cut into the flow of workday patrons at restaurants, shops and other establishments in downtown spaces that were once highly traveled.

They schedule breakfasts, they go out to lunch, they pick up their dry cleaning, they shop in these stores, and then they go out to dinner. “They’re a big part of the vitality of downtowns,” Baker told reporters after the event. If most people are going to move to a hybrid-type environment where they work two or three days a week remotely and then two or three days a week in the office, that will cause a lot of foot traffic.

For business leaders and workers, the issue has been top of mind. The Greater Boston Chamber of Commerce will host its third “Future of Work” discussion of the year next week, this time focused on downtown Boston.

A new Boston Business Journal and Seven Letter Insight poll of 209 Boston-area professionals found that many employees expect their offices’ footprints to shrink in the future, even though that trend has not yet come to pass.

Over the past two years, 45 percent of respondents said their company has increased in space or size, 43 percent said their company has stayed the same and 12 percent said their company has shrunk.

43 percent of people think that their company will downsize office space when their lease is up, compared to 42 percent who think they’ll stay in the same amount of space and 15 percent who think they’ll grow.

The results of the poll have significant implications for the commercial real estate market, according to Doug Banks, Executive Editor. As businesses pursue smaller office spaces, we could see a decrease in real estate costs.

The economic development bill filed by Baker and his team in April would spur new investments in downtown spaces and steer hundreds of millions of dollars toward housing production, transit-oriented development and public housing needs.

He suggested on Thursday that local and state officials should do more to support mixed-use developments and convert commercial spaces to residential offerings, as housing is an issue intertwined with the future of work and downtown vitality.

In Massachusetts, where production has been slow for decades despite population growth and the boom of new industries, the housing crisis is more acute now than it was before.

With seven months left before he leaves office, Baker said he thinks of housing as his number one worry, warning that swaths of young adults are at risk of being priced out of a future in the Bay State if they have not been already.

He said that it was the “holiest threat to the future of Massachusetts”.

At Thursday’s event, Baker highlighted his jobs and downtowns bill, as well as his tax relief package, a push to make it easier to detain criminal defendants deemed a risk to the community, and health care funding reforms.

With the July 31 end of formal lawmaking sessions looming just seven weeks away, a deadline on Baker’s mind when he faced an audience question about the prospects of legalized sports betting, that’s a long list.

Between now and the end of the year, the Legislature has a lot of things to do. It’s difficult to tell which pieces are going to get to the end. I hope that this one does.

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