Is the Return-To-Office Push Running Out of Steam?

Office tenants trying to anticipate return-to-office trends as they adjust footprints in lease renewals just had another cloud added to the fog of uncertainty shrouding predictions of a robust rebound in office work.

After weeks of steady increases, Kastle Systems’ 10-city Back to Work Barometer recorded a slight decrease in average office occupancy, to 42.8% from last week’s level of 43.1%.

The barometer, which tracks card-key swipes of office workers in 10 of the largest US markets, had risen from 40% in Kastle’s March 23 report to 43.1% on April 6. Kastle’s last three reports of the average appear to show a plateauing of the return-to-office trend, with the average hovering between 42% and 43%.

According to this week’s report, this leveling off is happening in markets across the US: half of the 10 metros surveyed for the April 18 report notched a reduction in their office occupancy percentage, including a dip of 1.5% in Washington DC, a 1.3% decline in New York and a drop of 1.2 percent in San Jose.

Kastle also reported fractional reductions in Philadelphia and Austin in this week’s report. Dallas, Houston, San Francisco and Los Angeles had fractional gains, none more than 1%; Chicago’s occupancy level remained unchanged at 37.8%.

Kastle dismissed this week’s downtick as a blip most likely due to workers taking time off during their children’s spring break vacations from school.

The company said it’s “confident (office) occupancy rates will continue to rise in the months to come,” noting that tech giant Google and Apple have begun bringing workers back to their offices. Google brought back employees part time on April 4; starting on April 11, Apple began requiring its workers to come to the office for a phased return.

At the same time, it is becoming increasingly clear that employees who are returning are doing so reluctantly.

In survey results released this month, 64% of professionals who responded told consultants at Korn Ferry that a return to the office will have a detrimental effect on their mental health.

By a 3 to 1 margin, the respondents said they believe the transition back to office work would be harder than the transition to remote work at the beginning of the pandemic; 75% said they did not look forward to resuming commuting to work. The Korn Ferry survey polled 570 professionals across the county.

“Employers have to show why the return to the office is beneficial to both the employee and the firm,” said Juan Pablo Gonzalez, leader of Korn Ferry’s Professional Services practice.

According to Korn Ferry, many companies are easing into a hybrid work strategy and letting employees choose from several options for returning to the office, by setting a deadline for when workers need to come back, but not specifying how many days they need to be in the office.

“It’s a hard-date-with-flexibility approach,” said Kristi Drew, Korn Ferry’s global account leader for Financial Services, adding that many companies adjusting to hybrid work patterns are letting employees work out with their individual managers how many days they need to be in the office.

Earlier this year, a survey of 10,000 knowledge workers found that 78% want location flexibility, and 72% are unhappy with their company’s current flexibility level and will seek other opportunities this year.

Workers may have the upper hand in the unfolding negotiations with their bosses over office work, as a severe shortage of skilled labor is expected to impact the labor market for years, if not decades.