ICYMI: Hybrid Works Persists

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1:18Because planning for the future isn't only about knowing what's next. It's about making sure you're ready for what you can't predict. Let Cincinnati Insurance make your bad day better. Find an independent agent at CINFIN.com. Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. Well, the debate over remote work seems to be back. At least, I don't know, we kind of keep hearing some things. It could be here for years to come. The subway was empty this morning for me. I see it certainly. Well, and this is a funny week.

2:00Middle of the summer. Nobody's going to work when it's really hot in New York City. I don't know if that's what it is. I don't know either. Is it a funny week? I thought last week was a funny week. I thought last week was a funny week. Is it funny until September? Is that how it works in New York during the summer? It's funny-ish until September. Bloomberg actually, earlier this year, they pointed out, though, that we would kind of continue to have this debate. This was after President Trump added fuel to the remote work fire when he called federal workers back to the office full time. You might remember that.

2:23And that followed similar moves by J.P. Morgan and Amazon. And at the time, it did renew some of the tensions between those in favor of in-person work and the cohort that had been working remotely or with a hybrid arrangement since the pandemic. So curious to see what our next guest has to say, because he knows something. He knows actually a lot about this. Mark Dixon is CEO of International Workplace Group. It's the flexible office company that owns the Regis brand. Mark, what are we all doing? Because Carol and I, we never stopped coming in during the office. I did a little bit. I did a little bit.

2:53You worked from home a little bit? We were sent home. We were told to go home. You were told to go home. I started in the fall of 2020 and came right in. Yeah, you were here. What is the reality from your vantage point regarding work from home hybrid? Look, this isn't basically the sort of debate about work from home hybrid is sort of not missing the whole point of what's going on. So what's going on is the workplace is changing into a platform where companies, who are the customers, they're the ones paying for the workplace, not all of them, but a lot of them want to have much more flexibility, in particular in these volatile times, you know, AI, what's it going to do to jobs, blah, blah, blah.

3:35Hard to predict the future, hard to go into permanent space. So companies want flexibility, they want it off the balance sheet, not on the balance sheet. They want OPEX, not CAPEX. And they want to be able to find workers anywhere in the country. And that is what is happening. It's a strong move by corporate America, and it's a worldwide move where the real estate becomes less of something about leases and much more about people using a platform flexibly. So wait, so help me understand. So a lot more hybrid going on, even though we've got some big, well-known companies saying get back to work i mean give us give us yeah no it's it's not about back to work this is sort of um a trivialization back to the office excuse me yeah yeah back to the office back to work we're providing offices throughout the united states you know 2 000 buildings by the end of this year so pretty much anywhere you want to work you can go locally and work.

4:44This is about people not wanting, workers not wanting to waste two hours a day getting to and from an inconvenient office. This is about technology allowing sort of platform work to be a reality. So look, we're in the office business. So we have 1.4 million offices worldwide today. So we're very much in the office business, but we're in the office business near where people live and in New York City. You know, this isn't about, you know, the only work is done in the United States, in New York City or Chicago. It's done all over the country. So this is about, you know, allowing people to work productively.

5:28They can do it at home, but it's quite difficult for most jobs, some jobs suited to home. A lot of people need an office to be productive. And And so it just doesn't have to be miles away. That's all. For a period of time after the pandemic, when you thought about the relationship between workers and managers or workers and companies, the workers had the cards or had the leverage because it was tough to find employees. That relationship may have shifted in recent years as the labor market has softened a little bit as it isn't as tight as it was before. Who do you view right now as having the leverage?

6:06Look, companies always have leverage because they're the ones paying the salaries, they're the ones paying the bills. So what's driving the change is it's a much lower cost to support someone near where they live than to get them to come to wherever you are. So companies, is this being driven by companies, not by the workers, just to be clear. So companies want to save costs in particular today. And they absolutely want flexibility with, you know, you have to say, probably many of the things you're talking about, it's a volatile world. It's harder to predict what the next few years are going to look like, alone trying to commit to five or 10 years hence.

6:56So they want flexibility. they want to minimize capital investment and that's what's driving it's not sort of this idea that somehow workers have got leverage you know if you ask workers a lot of them will say yeah look I'd love to work near to home if I can some will say yeah I'd like to work at home but all of them want to be productive you know that's it's it's not a sort of this sort of very polarized argument where it's a pull and push. It's a general push by corporations to have a much more effective, lower cost, more practical working environment for their people. So Mark, when it comes to the real estate model, the commercial, the office real estate model, is it going to be then in your view from what you are seeing, your vantage point, that it's more about not company XYZ building this massive headquarters and then maybe, you know, satellite offices around the country.

7:54It's more about maybe having a headquarters somewhere, but then they're more likely to rent space from you. Is that increasingly what you're seeing? And so there will still be demand for office space, but you will be someone who owns more of it than maybe company XYZ. We don't own any of it, just to be clear. You don't? No, we don't. We operate it for landlords. So landlords also can see the future. It's a technology distorted future where you can work from anywhere. We all can. And so, you know, the demand has changed. That's the reality. So we work for building owners to convert their buildings and put them on our platform to make them available for people and companies that want to buy what they need, when they need it, for the time they need it, with a simple half a page agreement.

8:56There's no leases. Okay. So it's the modern picture of real estate. It's like Uberization, right, of office space almost. Yeah, absolutely. So you have a good picture. We only have about 30 seconds left. You have a really good picture of demand for this stuff, which I think we can use as a source of data on the economy, at least anecdotal. How would you describe demand right now? Very strong. I mean, look, we're growing. We're adding a thousand buildings a year. We expect it will be 50 percent more next year. You know, that's that's that's demand for you. And you look at our revenue growth and so on.

9:35So that's how you can see it. Interesting stuff. Always, always. Mark Dixon, thank you so much. CEO of International Workplace Group. By the way, there are ADRs that trade in the U.S. It's a$3 billion market cap. They're up about 45 % year to date. You take a look at the stock that trades on the London Stock Exchange up about 35 % year to date. So investors, definitely interested.

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