The “Return to Office” Campaign Bust
Over two years since most offices closed to non-essential workers, and a disrupted "return to normal" last year, makes it seem unlikely Central Business Districts will ever be the same.
After a year of COVID restrictions, everyone other than the workers themselves had high hopes employees would return to their high rises in central business districts (CBD) five days a week. But what started out as a concerted push last year to “return to normal,” mostly by financial firms, has faded since December’s Omicron wave.
Add on a tight labor market, shifting the balance or power toward workers, and you have the elements necessary to undermine all the “best laid plans” of return-to-office campaigns. In April, Apple employees pushed back against the company’s return to office pilot program, which required most corporate workers to be in the office at least three days per week. But you cannot live anywhere without some downside. Google, to disincentive moves, announced that if you want to permanently telecommute away from your current office, your salary would be adjusted to the cost of living and labor market in your new location.
Yet, it seems a permanent segment of the population will work fully remote and even more on a hybrid basis. Despite this notable shift, some politicians are still longing for a day their CBDs return to pre-March 2020 occupancy levels. If CBD occupancy does improve, it is unlikely to do so in any substantial way, but rather cap out at some “new normal” level unless something dramatically changes.
If It Hasn’t Happened Yet, It Isn’t Going To
Remote work is here to stay. Between April 21 and May 4, 2022, the Partnership for New York City surveyed more than 160 major employers and found 38% of Manhattan office workers are in their workplace as of late April on an average weekday. They expect that to rise to 49% by September. In stark contrast to pre-March 2020 figures, the survey also noted that 78% of employers indicated use of a hybrid office model, up from just 6% pre-pandemic.
In a recent editorial, the Wall Street Journal asked: Can firms get their workers to come back to the office? Edward Glaeser, chairman of Harvard’s economics department says, yes: “They can use their wage power to get anyone to come back.” There’s a price at which “almost all of us will come into the office—the question is, just how much?”
But with companies competing for talent by offering more incentives, and in most cases a flexible working environment, increasing wages to get employees to work out of an office more than three days a week seems unlikely. Lage banks, the earliest proponents of getting people back into their offices, have become more tolerant of hybrid working models. Yet, just a few weeks ago, the CEO of JPMorgan Chase & Co said that at least for his offices: “In my view, September, October, it will look just like it did before and everyone’s going to be happy with it.”
New York City has multiple business districts, and there was a sign of good news Midtown Manhattan is getting more foot traffic. Times Square recently showed 330,000 pedestrians on its busiest days, or nearly 80% of its foot traffic pre-pandemic. The Bryant Park Corporation also reported that the lunch crowd got up to 3,500 people a day in May, or about 83% of its pre-pandemic level. While the numbers are signs of improvement, it is difficult to tell the difference between commuters and tourists in what is reported.
But even if workers want to come back, or are ordered to come back, another major problem is physically getting to the office. Commuting is not a fun experience, and it has only gotten worse as the pandemic brought havoc tp transit systems and increased road congestion.
Commuting Sucks: “Hell is Other People”
Last year, The New York Times reported that the nation’s largest and most expensive metropolitan areas (New York, Los Angeles and San Francisco) represent nearly a third of all those making a “long commute” or one in which you travel 90 minutes or more in each direction. The Wall Street Journal did their own recent analysis and found “cities with longer commutes have taken the biggest economic hit, while urban areas where people live closer to work have a higher return-to-office rate.”
With commuting is often the worst part of most people’s day, it is not surprising that a survey last year found that among those working on-site full-time at a job that could also be done remote, only 52% wanted to continue to work on-site and 37% wish they could work hybrid. The remaining 11% wanted to work exclusively form home. In a more recent survey, only 23% anticipated being fully onsite.
In April, crew shortages were to blame for 5,398 delays, MTA numbers show, the most per month since January, when there were 6,353 delays tied to crew availability. But that’s down significantly from last December during the omicron wave, when the transit agency said there were 13,282 delays because of crew shortages.
Sartre said “hell is other people.” And to sometimes interact with people on our commutes, it can be an exceedingly unpleasant, and at times a dangerous, experience. The most horrific parts are the random acts of violence unnerving even to the most steadfast of transit users. Most recently in New York City,
Responding to COVID worries and transit concerns, people have been driving more. In the Washington, DC metro region many commuters have largely driven to work over the years. But concerted efforts by the region’s transit agencies in prior years to boost ridership may be permanently undone. While congestion on the roadways has increased, the DC area’s Metrobus ridership is hovering around 70% of pre-pandemic levels while Metrorail has lagged at about 30%.
In New York City, while bus and subway ridership has yet to substantially recover, bridge and tunnel traffic is at or exceeding pre-COVID levels. Subway ridership reached a high of nearly 63% of its weekday rolling average pre-COVID toward the end of May, before declining due to the Memorial Day holiday.
This leaves state and local governments in a bind: what do you do with empty business districts? More on that later.
Any opinions expressed herein are those of the author and the author alone.