Return to Office Barometer Gives Up Q1 Gains

Office workers appear to be voting with their feet on return-to-office mandates from their employers, with at least one leading indicator pointing to a strong majority in favor of hybrid or remote work options.

Kastle’s weekly 10-city average of office occupancy, which had surged from 40% in March to 43.1% on April 6, gave back all of these recent gains in this week’s report, which showed the Back to Work Barometer average sagging to 40.5%.

The 40.5% 10-city average is 2.3% lower than the 42.8% occupancy level Kastle reported last week.

The barometer, which measures entry-card swipes in office buildings in the largest US markets, revealed a broad retreat in the back-to-office push as all 10 cities surveyed registered declines in this week’s report.

Unlike the slight upticks and downticks recorded by Kastle in recent weeks—changes which hovered around 1% and appeared to signal a plateauing of occupancy rates—the size of the dips in this week’s report were eye-opening.

Kastle reported a 5.4% drop in office occupancy in Houston; a 4.2% drop in New York; a 3.6% drop in Austin; a 2.8% drop in Dallas and a 2.5% dip in Philadelphia.

Office occupancy levels dipped by 1.4% and 1.2%, respectively, in Los Angeles and San Francisco; Washington DC, Chicago and San Jose each reported a dip of less than 1%.

Analysts say a combination of spiraling inflation, which has increased commuting costs for office workers, and a growing preference for hybrid work are undermining the return-to-office push.

A report last week in The New York Times detailed the “sticker shock” returning workers are experiencing as they confront the rising cost of their daily office work routine with inflation spiking at 8.5%. Average gasoline prices in the US rose from pre-pandemic levels of $2.60 to more than $4.30 last month, the report noted.

The cost of going back to the office is prompting workers to demand more flexibility in work schedules and pay increases, which is putting greater pressure on employers to accept hybrid work patterns, the Times reported, noting that wages, which grew by 5.6% last year, are not keeping pace with the rate of inflation.

More than half of the workers surveyed in a recent Harris poll said soaring inflation makes them more likely to want to work remotely, USA Today reported.

According to consultants Korn Ferry, many companies are setting deadlines for returning to the office, but they are giving employees the option of choosing how many days per week they need to be in the office.