Will the Digital Nomad Influence Commercial Real Estate?
Although Digital Nomads have been around since the 1990’s, I just recently learned the term which describes a person who earns their living at locations of their choosing instead of a fixed office location.
They spend their time traveling the world and stay in a location anywhere from a week to a year. Not surprisingly, the number of digital nomads has shot up since 2020. In 2019 there were 7.9 million and by the end of 2022 there are estimated to be 35 million, about half of which are from the US. In the past year there has been a 37% rise in this lifestyle choice.
While this is a relatively small group, if the speed of growth continues, it could be a much larger population in a few years. Much has been written about work-from-home changing the needs of commercial real estate, but digital nomads may change needs in a different way. While both groups do not go to a traditional office, the nomad has different needs for living situations and relies on short-term rental properties, thus increasing demand for this use. They also need good access to Wi-Fi and seek out locations that have a social aspect onsite or nearby, to make it easier to connect with new people.
We are already seeing growth in the extended stay hotel concept. Larger rooms with living space and a kitchenette are valued by the digital nomad. Likewise, short-term rentals that have high speed internet, are located near activity centers, and offer easy access to cafes, libraries, and co-working spaces. These short-term rentals often need at least one bedroom per occupant, so partners can each have their own room to work from, while leaving living space available for the other’s use. Remote co-living rentals have also become available, where they rent fully furnished rooms in an apartment. Most of these are rented sight-unseen and leases are signed digitally, creating new ways for tech-savvy landlords to offer a superior product.
Since the digital nomad is often only in one location for weeks or months at a time, they often seek out places where it is easier to connect with like-minded people. This may be through an activity offered on site such as sports, fitness, or yoga, or it could be a place nearby such as a coffee shop, library, park with public Wi-Fi or an office center catering to weekly and monthly tenants. This makes the location of the rental or extended stay hotel very important.
Digital nomads often work in the fields of marketing, computer sciences, writing, design, and eCommerce. My ad rep for our local business news just got back from working in Puerto Rico for six months. He kept in touch with me, let me know about special publications and I sent my ads to him like always. I didn’t even know he was gone until he got back. Most digital nomads work full time and if they can find Wi-Fi and a good place to work, they can work successfully from anywhere and their clients won’t even know. As more people choose this lifestyle, we are sure to see changes in how real estate is built and buildings are utilized.
Dan Stiebel, CCIM