https://www.vox.com/technology/2023/5/15/23721410/return-to-office-remote-work-commercial-real-estate
The so-called “return to the office” has been underway for a while now, and it’s a bit of a mess. Sure, more people are going to the office more often than they were a year ago, but we’re still eons away from where we were before the pandemic. And despite the gains in office attendance, many office buildings themselves are in big trouble — some of which goes beyond remote work and started long before the pandemic.
So despite what you’re hearing from some bosses, things will likely never go back to the way they were.
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As of now, the data shows that a majority of workers who were able to work from home still do some (46 percent) or all (19 percent) of the time, according to the latest data from WFH Research. Before the pandemic, these numbers were in the single digits. Stanford economics professor Nick Bloom, who helps run the project, thinks the number of workers in hybrid situations might actually climb to around 60 percent, with most of the gains coming at the expense of people currently in the office full time. That outcome is already showing up in survey data, as companies who said their workers would be fully on-site last year are now switching to hybrid work.
The weak return-to-office movement means that a lot of office space is being left empty. In North America, office utilization — the number of spaces that are used as a percentage of all spaces available — is currently at about 21 percent, less than half what it was pre-pandemic, according to XY Sense, a company that uses sensors to track office occupancy. That’s consistent with data from key card swipe company Kastle, which shows US office occupancy levels to be at 50 percent of its pre-pandemic levels.
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Many of the office market’s challenges are new and have arisen since the start of the pandemic. While remote work certainly existed before the pandemic, it’s now mainstream. It can be a cheaper option for companies, and it also allows them to recruit from wider talent pools, meaning they’re likely to continue using it as a competitive advantage.
Huge cuts in the tech industry after more than a decade of rapid growth mean that the sector is no longer the largest lessor of office space. Companies like Meta, Lyft, and Salesforce, which once helped drive up prices with their huge real estate needs, have put millions of feet of office space back on the market, sending shockwaves through the real estate industry.
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None of this is to say that offices will suddenly be a thing of the past. But there will be fewer of them, and people will go to offices less frequently than they did. In time, more office space will go back to banks or, if possible, be converted to other uses like housing, laboratories, or logistics. Developers have already stopped building as much office space. The offices people do go to may be nicer, since tenants have their pick of office stock amid all the open leases. And for others, they just won’t have an office to return to.