Office towers and nearby businesses in central business districts are missing out on the strong economic recovery, largely because the surge in vaccinations and the easing of mask restrictions haven’t pushed most employees back to work.
According to Kastle Systems, an average of fewer than three in ten employees worked in offices in ten major US cities, including New York, Los Angeles, San Francisco, and Washington, DC. The nationwide security company monitors card swipes in more than 2,500 office buildings in cities across the country.
By Monday, an average of 31% of office workers had returned to the jobs they were before Covid-19 pandemic, says Kastle.
The number of people back to the office has increased since the introduction of vaccines in the United States. In some cases, employees have pushed back their employers’ return requests. In others, companies wait until the fall – when vaccinations become even more widespread and schools are up – to reopen larger offices.
Office workers “don’t come into effect yet,” said Mark Ein, chairman of Kastle. “Habits that have developed over the past year and a half will take a while to break.”
By Monday, according to Kastle, an average of 31% of office workers had returned to the jobs they had occupied before the Covid-19 pandemic.
Mostly vacant office buildings contrast with overcrowded restaurants, busy airlines and busy sports arenas. Some are now working at full capacity.
The slow pace of returning office workers is delaying more robust reopenings in cities like New York, San Francisco and Chicago by expanding the struggle of small businesses in mostly empty business districts.
Several factors make it difficult for some companies to get employees back into the office. According to many surveys, most workers prefer to work from home some or all of the time, and some are now pushing back when their employers tell them about plans to reopen office space.
Many companies expect the return pace to accelerate in September as many schools fully reopen and the summer travel season comes to an end.
Photo:
Amir Hamja / Bloomberg News
The office was usually returned piece by piece. A view of downtown Newark, NJ, on Thursday.
Some continue to have health concerns and others do not want to be vaccinated as companies decide whether to require vaccinations and some allow exceptions.
A couple of high profile companies like
Salesforce.com Inc.
in San Francisco and
& Co. in New York City have started reopening offices to employees who have worked from home. However, according to Kastle, fewer than 21% of workers in these two cities are back in the office.
Many companies expect the return pace to accelerate in September, when many schools fully reopen and the summer travel season comes to an end. An employer survey by the Partnership for New York City, a group of companies, found that 62% of their employees would be back in offices in September, up from 45% in March.
But for now, the city’s office towers haven’t seen the significant surge in worker returns that many had hoped for as the health threats from Covid-19 subsided. The stores and restaurants that rely on clerks as their primary customers are wondering “where all the clerks are,” said James Mettham, executive director of New York’s Flatiron-23rd Street business district.
Before the pandemic, a workforce of around 100,000 employees commuted to the Flatiron area every day. Most office workers haven’t returned today, he said.
“Everyone knows that it will be difficult to keep going unless we get a much larger fraction of those 100,000 people,” Mettham said.
Salesforce.com, San Francisco’s largest private employer, began reopening its offices there on a voluntary basis last month.
Photo:
David Paul Morris / Bloomberg News
The office was usually returned piece by piece. Salesforce.com, San Francisco’s largest private employer, began reopening its offices there on a voluntary basis last month. So far, only 200 of the 10,000 workers in the city have returned.
According to Kastle, the national average return to work reached 14.6% in April 2020, a low after the pandemic.
Law firm Sills Cummis & Gross, with offices in New York and Newark, NJ, began bringing employees back this month, managing partner Max Crane said. He said the plan was complicated by finance, politics, health and human nature.
“You have to respect the psychological and emotional aspects,” he said.
Max Crane, managing partner of Sills Cummis & Gross, said, “You have to respect the psychological and emotional aspects,” referring to the office return.
During the pandemic, a large gap in the office return rate has developed in various parts of the country.
Texas cities have led the pack partly because they are less dense and workers are less dependent on public transport. These differences have only increased in recent weeks with the country’s reopening. In Austin, Dallas, and Houston, the response rate is in the 40% range, according to Kastle, more than twice as high as in San Francisco and New York.
Part of the difference is “Texas bragging rights,” said Oliver Carr III, CEO of Carr Properties, which owns approximately 4.7 million square feet of office space. The feeling is, “Let’s get back quickly and get back to normal,” he said.
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Technology company
plans to begin bringing non-essential workers back to North America this summer, although the pace is likely to fluctuate due to vaccination rates, said Kirk Skaugen, an executive vice president.
Lenovo’s sprawling Morrisville, NC campus is in a state that dropped its mask mandate in mid-May. Lenovo’s Canadian offices may open later as the vaccination rate is slower in that country.
Sills Cummis started opening its New Jersey office this month but will wait until July to open in New York due to the differences in density and worker reliance on public transport. “The buildings in the city are taller. The elevators tend to be more crowded. There is a greater likelihood of being in close proximity, ”said Mr. Crane.
The law firm Sills Cummis & Gross started bringing employees back this month.
Despite the tech industry’s massive shift to remote working, Facebook is doubling the number of physical office space in New York. It signed a major contract during the pandemic, making it one of the city’s largest corporate tenants. WSJ takes an exclusive look at Facebook’s future NYC offices. Photo illustration: Adam Falk / The Wall Street Journal
Write to Peter Grant at peter.grant@wsj.com
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