Return-to-Office: No and Yes – Jan. 15, 2024

A new survey of CEOs from the Conference Board provides another data point in support of the argument that office use post-pandemic isn’t what it once was and may not return to pre-pandemic norms in the foreseeable future. Covering topics ranging from the cost of borrowing to geopolitical uncertainty, the survey found that CEOs domestically and globally have largely given up on bringing their employees back to the office. 

Just 4% of CEOs in the U.S. plan to prioritize full-time office attendance. A similar percentage say the same thing globally. 

The Conference Board suggested that labor shortages and talent issues factor into the decision to end the return-to-office battle. Among U.S. CEOs, attracting and retaining talent is the #1 internal priority. Labor shortages are the #7 external priority. Global CEOs take a similar stance, except that labor shortages move up into fifth place among external priorities. 

However, another new study posits a considerably brighter outlook for office. Commissioned by leading proptech firm VTS, the Global Workplace Report surveyed more than 400 business leaders on their corporate tenants’ needs and expectations. Among the findings: 

• A strong return-to-office is in the cards for 2024. 62% of companies currently utilize a hybrid work strategy. 38% of global companies are back in the office full-time and 52% of companies require employees to come to the office 1-4 days/week. Only 10% of companies are taking a remote-first or office-optional approach. 
• Collaboration, community, and productivity are leading motivators across North America and Europe as reasons to come back to the office. 36% of companies surveyed say in-person collaboration and community are what entices talent to the office 
• 59% of companies saying that they are consistently navigating an expanded workplace, with work happening from home, shared spaces in their building and most notably, flex spaces, which remain in high demand 
• 69% of companies say their office space is just the right size to meet their current needs with 19% claiming their office is too small and 12% saying their office is too large. 

In New York City, recent transaction stories from Connect CRE have also pointed to a different outlook for office. Just before Christmas, law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP signed up for 765,000 square feet in Midtown Manhattan. It’s a bullish space commitment with an equally bullish lease term: 20 years. 

Elsewhere in Manhattan, jeweler David Yurman and food delivery service DoorDash have greatly expanded their office footprints, with each now occupying more than 100,000 square feet. And nationwide, the outlook is far from the unrelieved gloom some would have you believe, as you’ll read in this new report from Connect CRE’s Amy Sorter.