A recent spike in COVID-19 cases throughout the U.S. caused a major setback to return to work numbers—especially in cities, according to The Wall Street Journal. Things had been looking up after Labor Day, but the telework trend has begun to pick up momentum again, according to property analysts. Approximately 25% of employees had returned to their offices as of November 18, Kastle Systems, a security company that monitors access-card swipes in more than 2,500 office buildings in 10 of the largest U.S. cities, reports. It’s an improvement from the 15% of employees who were coming to the office in April, but still down from the 27% high point that was reached in mid-October.
The drop off of employees coming back to work has been frustrating for commercial real estate owners who had invested millions of dollars to make their tenants feel safe working in their buildings again following the pandemic.
Increased telework hurts cities, too
CRE owners aren’t the only ones who’ve been hurt by companies opting to extend their remote work policies. Cities and businesses around these office buildings are feeling the negative impact of empty offices, too. For example, public transportation systems in cities like New York, Boston and San Francisco have lost billions of dollars in revenue because more people are working from home. The restaurants, shops and services that reside near city office buildings have also felt the pinch from the increase in telework.
There’s also the city exodus factor. A lot of city populations are dropping as more people are moving to suburbs where they can get more housing for their money. CoStar Group reports apartment rents in San Francisco have decreased 20% since March.
Companies anxious to return to work forced to hit brakes
There are a number of employers, and employees, who want to get back to normal and start working out of their offices again. The Gensler Research Institute’s “U.S. Work From Home Survey 2020” revealed that 44% of its respondents listed “no workdays from home” as their preferred choice versus just 12% that wanted to continue working remotely five days a week. Those that want return to the office cite better collaboration as one of the primary reasons they wish to do so. However, even these companies have had to reconsider their position as the number of COVID-19 cases rises again.
Robotics company OhmniLabs in San Jose saw about 75% of its 25 employees come back to its offices this fall, but had to change its policy when infection rates went up. Only employees that are directly involved in manufacturing the company’s robots were to report to the office, according to The Wall Street Journal.
“Going forward we’re going to continue to encourage people to work remotely,” OhmniLabs Chief Executive Thuc Vu said. “Let’s just accept it as the new normal.”
Remote work could be the norm for foreseeable future
It could be sometime next year before return to office numbers rise again, according to CRE industry experts. The Centers for Disease Control and Prevention (CDC) has continued to urge caution. Meanwhile, office-building values continue to decrease because tenants are subleasing space or asking for rent decreases. Tenant searches for new office space in once desirable city locations has fallen and the amount of delinquent office mortgages has jumped from 1.7% in February to 2.3% in November, according to data firm Trepp, LLC. Kastle reports that San Francisco’s return to work rate was just 13.4% as of November 18, while New York’s wasn’t much better—just 15.9%.
The Dallas-Fort Worth region however has seen about 40% of its workforce return to its offices, however. The high number is in part due to warmer weather, less reliance on public transportation and an environment that’s less inclined to shut down. Cushman & Wakefield Vice Chairman Mike McDonald said local restaurants, bars and business districts are adhering to social distancing measures, but are still lively during lunchtime.
“When we have investors come in from New York and San Francisco, they’re saying ‘Wow, this is eye-opening. This is a different experience from what I’m having at home,’” McDonald told The Wall Street Journal.
Joe Dyton can be reached at firstname.lastname@example.org.