Does Office Foot Traffic Matter or Not?

Better occupancy in office buildings pretty much requires that people show up more frequently. Some analysis of foot traffic data from Placer.ai give a bad news, good news story.

Placer.ai uses cell phone information to pinpoint the movement of people down to the property level. That allowed them to model the number of people going to different properties. In this case, they looked at foot traffic data from about 1,000 office buildings and office buildings with first-floor retail offerings. The analysis doesn’t include residential-and-commercial mixed-use buildings.

There are logical limitations on what the data can show. There is no way to know why people go to a building. They might be employees, customers, or visitors. It isn’t occupancy in an office building, But even so, it makes sense that foot traffic will correlate to some degree to the amount of use a building receives.

In March, they looked back to February 2024 data and compared that to the same month in 2023 and 2022.

“Nationwide, visits to office buildings were down just 31.3% in February 2024 compared to February 2020 – the nation’s last “normal” in-office month before COVID changed everything,” they wrote. “This relatively narrow year-over-four-year (Yo4Y) visit gap may be partially due to this year’s February leap day: Last month had 20 working days, compared to just 19 in February 2020 and 2023. (2020 was also a leap year, but the extra day fell on the weekend.)” And while visits were down from 2020, they were up over the same period in 2023 by 18.6%, “which, even accounting for the month’s extra day, points towards significant growth.”

Outside of the national numbers, some cities have bounced back more firmly than others. Miami had seen foot traffic drop by 9.4% between 2020 and 2024; but it jumped 23.0% from 2023. New York was down 14.5% from 2020 to 2024 but was up 21.7% from 2023 to 2024. Both cities regained more foot traffic than they had lost. In Dallas, foot traffic was down 21.4% from 2020 to 2024; it was up 25.0% 2023 to 2024.

The rest after those three — Atlanta; Washington, D.C.; Denver; Chicago; Houston; Boston; Los Angeles; and San Francisco — have yet to recover the foot traffic they had lost. San Francisco had lost 46.0% from 2020 to 2024 and gained only 24.0% from 2023. Los Angeles lost 41.4% and then regained 11.5%. Boston was 41.7% down and 20.0% back.

However, the interactions are more complicated than they seem at first. Nick Villa at Moody’s Analytics noted this, writing that while San Francisco is “the most mired with office visits” and that lost of 46.0%, but its recovery of even 24% was the second highest after Dallas.

“Rather than posit the reasons behind the increased foot traffic over the past year, a more interesting question, in my opinion, is how has increased employee office visits translated into presumably higher tenant/employer occupancy levels?” Villa wrote. Using Moody’s Analytics CRE office occupancy data, he calculated that “as of February 2024, nationwide office occupancy was 280-bps lower compared to February 2020 and 80-bps lower compared to February 2023.”

Higher increase in office visits don’t necessarily mean higher occupancy rates, he argued. “For instance, the February 2020 comparison indicates that for every one percentage point increase in office visits, occupancy increased by approximately 12-bps,” Villa wrote. “Conversely, the February 2023 comparison indicates that for every one percentage point increase in office visits, occupancy decreased by 4.9-bps.”

While having increased foot traffic is good, Villa argues that continued changes in office usage will likely continue. What could make a difference in office occupancy is more return-to-office mandates by companies combined with cooling labor markets — although given recent job reports, the latter could have a long way to go.