In recent times, one of the most significant changes, as accelerated by COVID, to the professional landscape has been the shift of the workforce from the office to the home. However, a recent report on CNBC Property Play suggests a reverse trend in motion, with companies increasingly cracking down on remote work and urging employees to return to the office. This report explores this shift, its implications for real estate investments, and the general public sentiment towards it.
Diana Olick, a correspondent for CNBC, shared insights on the state of return to the office and how it is impacting office vacancy rates. According to a report from CBRE, companies have made more progress in getting employees back to the office in the past year than at any time since the pandemic began. Nearly three quarters of the 184 companies surveyed have met their attendance goals, up from 61% the previous year.
In addition, the share of companies monitoring attendance has jumped to 69% this year, up from 45% last year, a 53% increase in the proportion. Those enforcing attendance policies have also risen sharply to 37% from 17%, more than a doubling of the proportion. These statistics present a clear picture of companies’ increasing emphasis on physical attendance and their move away from remote work.
Interestingly, more companies expect to expand their office footprints rather than contract them. There has been a noticeable slowdown in office development due to the pandemic, and many offices have been converted to residential housing. Despite this, 67% of companies have stated they will either keep their office footprints the same or expand within the next three years, up slightly from 64% a year ago. For those expanding, the primary reason cited is business or headcount growth.
However, overall office vacancy is still high at 18.9%, just under the 30-year high of 19%. The main wildcard in these numbers is tariffs. As Olick mentions, the office space market is seeing a surge in demand for class A office spaces. These spaces are already at a premium and are becoming increasingly difficult to find due to limited new development since the pandemic. The show’s host further emphasized this point, noting that the vacancy rate for class A spaces is lower, closer to 15%.
As the pandemic evolves and businesses continue to adapt, it will be interesting to see how these trends and attitudes shift. For now, the dialogue around the return to the office continues to be a hot topic, reflecting the broader societal adjustments in the wake of COVID-19.