Momentum for a broad return to the workplace this summer is fizzling in the face of uprisings from employees reluctant to assume the risks of office life — or surrender the perks of working from home.
More than seven in 10 office workers were still working remotely as of May, according to a Gallup study, and two-thirds of them want it to stay that way.
In what some economists have already dubbed the “Great Resignation,” surveys suggest that an overwhelming majority of American workers are considering quitting their jobs or even changing careers after a year at home caused them to reevaluate their priorities.
Nonetheless, the march back to the office continues at a slow and steady pace.
As of late May, Manhattan employers estimated that 62 percent of workers would be back at their desks by the end of September — up from a 45 percent projection in March, according to surveys by the Partnership for New York City.
Rate of return
The real estate industry has led the charge in bringing staff back to the office, with 70 percent of employees already at their desks in May, the survey found. Real estate employers expect 90 percent of employees to return by July and almost all to be back by September.
Wall Street firms are eager to bring workers back to the office for a range of reasons — from the cybersecurity and confidentiality threats of remote work to the critical mentorship that underpins banking’s work culture. Many financial firms — including Goldman Sachs, JPMorgan and Blackstone — have already called their workers back as early as June or July, at least part-time.
JPMorgan, long at the vanguard of the back-to-office movement, even plans to bring some employees back five days a week, according to a June 23 memo reported by the New York Post.
Labor Day is emerging as a hard deadline for many big companies, but even that is facing pushback from employees now used to the comforts of working from home, prompting some firms — particularly in the tech industry — to backtrack from previous plans.
Two days after Apple’s Tim Cook told staff to come into the office three days a week starting in September, employees responded with an internal letter panning the policy and complaining of a “disconnect” between executives and staff over the issue, according to the Verge.
Google has already rolled back its back-to-office plans, which, like Apple’s, had envisioned all employees returning to the office at least three days a week by the fall. The firm now expects as many as one-fifth of its workers to continue working remotely full-time.
Uber is also discussing easing up its plans for a three-day office week in response to employee grumbles, according to a June report by Business Insider.
Facebook has beaten a full retreat, reversing a policy unveiled in May that narrowly limited the number of employees who could continue working remotely and announcing in June that all staff could apply to work from home permanently.
The social network still plans to reopen its New York offices in July to staff who want to get out of the house, and has indicated that remote employees who move away from expensive metro areas could face pay cuts.
Morgan Stanley CEO James Gorman was even more explicit in linking compensation to location, telling an investing conference in June, “If you want to get paid New York rates, you work in New York.”
Nearly 40 percent of workers would consider quitting if their bosses forced them back into the office full-time, according to a May survey of 1,000 workers commissioned by Bloomberg, with that number rising to nearly 50 percent when it comes to millennials and Gen Z.
Ditching the commute is the benefit most frequently cited by remote workers, with fear of Covid exposure a smaller but still significant factor in resisting a return to the office.
Still, mitigating health risks remains a priority for employers at a time when vaccination rates are plateauing even as more virulent strains proliferate.
Some firms, such as BlackRock and Morgan Stanley, have pledged to ban unvaccinated staffers from their offices. JPMorgan and Goldman Sachs will require returning workers to confidentially divulge their vaccination status, and may mandate regular testing for those who haven’t gotten the jabs.
But another factor may also be driving the back-to-office backlash: the boss.
A FlexJobs survey conducted in March and April found that 88 percent of remote workers believe their productivity increased or at least held steady while working from home. Many, particularly younger workers, resent the push to get them back into the office as emblematic of a lack of trust and a desire for control.
“They feel like we’re not working if they can’t see us,” Portia Twidt, an office worker in Marietta, Georgia, told Bloomberg. “It’s a boomer power play.”
Even a slow return to traditional workplaces should give hope to commercial landlords after a year spent mourning the death of the office as we know it.
Manhattan’s office availability rate hit yet another all-time high, 17.1 percent, in May, according to Colliers International’s monthly market snapshot. As of late June, almost 20 percent of Manhattan office space was up for rent, according to CBRE, amounting to nearly 80 million square feet of space either unrented or posted for sublet.
But the market is starting to show signs of recovery. May’s leasing volume was up more than 56 percent over April’s. Sublet space represented 22.8 percent of total availability in May, its lowest share since July 2020, and average asking rent actually ticked up 0.4 percent over April.
Investors seem optimistic about a bounce-back in the hardest-hit urban markets over the long term. Nearly three-quarters of real estate industry professionals believe that office leasing velocity in major cities will return to pre-pandemic levels within the next four years, according to a May survey by law firm Morrison & Foerster, with a majority expecting it within three. Fully a quarter foresee a full recovery within two years or less.
SL Green CEO Marc Holliday would definitely fit in with the latter cohort, predicting an “explosive recovery” for the city’s office market in an April earnings call.
Holliday has reasons to be bullish. The firm’s flagship property, One Vanderbilt, is now on track to reach 90 percent occupancy by year’s end, exceeding its previously stated goal of 85 percent. The 58-story tower opened last September at a time when the future of office buildings was in serious doubt. But on June 28, SL Green inked a $3 billion refinancing deal for One Vanderbilt in one of the biggest single-asset commercial mortgage-backed security loans in history, suggesting that some institutional investors share Holliday’s rosy outlook.
Vindicating that optimism will require bringing many more workers back to the office. About a third of commercial leases are slated to expire in the next three years, CBRE figures show. If tenants still see lots of empty desks when it comes time to renew, they could shrink their footprints or demand steep discounts.
This could have an acutely detrimental impact on office landlords, according to Nicole LaRusso of CBRE, who projects that rents could tumble to more than 20 percent below prices seen in late 2019.
“This is a slow-moving train wreck,” Daniel Alpert, managing partner of investment bank Westwood Capital, told the New York Times in June. “People are dumping space on the market, and it’s all quality space.”