Hopes that Return to Office will bail out the office sector of CRE seem premature: Data on office attendance and Working from Home.
By Wolf Richter for WOLF STREET.
The good folks in commercial real estate, including institutional investors, have been saying for over a year that the Return-to-Office mandates will scuttle Working-from-Home and fill up office space and boost the office sector out of its epic depression.
The media have jumped all over it with breathtaking headlines every time a company mandated a full five-days-a-week RTO, and enough companies have done so to keep these stories percolating, such as Tesla in 2022 already, then Amazon, Goldman Sachs, J.P. Morgan, Morgan Stanley, X, Dell, etc. Lots of times, these in-office policies come with the explicit or implicit threat of “or else.” And the Trump White House has been in the news with its battle trying to force it to happen with whoever will be left working for the government.
But those media reports may be giving the wrong impression, and in fact very little has changed since the beginning of 2023 in terms of actual office attendance and the percentage of full paid days worked from home – which is what should matter to the CRE industry, rather than the breathless media reports. So we’ll look at these two data sets.
Office attendance has barely ticked up in two years.
Kastle’s weekly back-to-work barometer – which tracks how many people enter an office building for which Kastle provides the electronic access system – has barely ticked up since the start of 2023. Its weekly barometer measures office occupancy as a percentage of what it had been before Covid. So if pre-Covid levels of office occupancy come back, the barometer would rise to 100%, meaning same occupancy as before Covid, the good old days, so to speak.
But far from it. The average occupancy in the top 10 office markets in the latest week was still only at 54% of where it had been before Covid, so still down by 46% from pre-Covid, and only a few percentage points higher of where it had been at the same time in 2023, and just a hair higher than at the same time in 2024.
In the chart, the top gridline = 100% = pre-Covid level. The 10-city weekly average (red line) has been around 50% since the begin
