When COVID-19 drove tens of millions of employees across the country to fully remote work, it looked like the start of a permanent shift away from the office.
Work-from-home days were already doubling every 12 years pre-pandemic. In March 2020, they increased 12-fold — equal to 50 years of pre-pandemic growth. Remote employees, untethered from centralized offices, said they were happier and felt more productive.
As pandemic restrictions eased, employers struggling with a tight labor market hesitated to push workers back to the office. Prospects for the $2 trillion U.S. office real estate market seemed grim. In Chicago, the office vacancy rate hit a 10-year high this year, at 15.2%.
Nevertheless, there are signs of a turnaround. Nationally, the office vacancy rate is falling. Leasing activity has returned to pre-pandemic levels. And contrary to the expectations of many forecasters, companies aren’t drastically downsizing their office footprint.
My organization, the Building Owners and Managers Association (BOMA) International, regularly surveys executives with authority or influence over office-space decisions. We found that in the Midwest, 67% of respondents said they planned to renew their office lease — up from only 35% in spring 2021.
Even in Chicago, the high vacancy rate is being driven more by new space becoming available than enterprises abandoning offices. The sublease rate, which spiked 40% due to the pandemic, has now stabilized at about 2%. Nearly 5 million square feet of new office space will soon become available to Chicago-area tenants, thanks to recent and upcoming construction projects.
In other words, reports of the death of the office were greatly exaggerated.
It’s worth remembering that most Americans never worked remotely during the pandemic. Even in May 2020, at the peak of lockdowns, the share of workers doing so was just 35%.
Meanwhile, workers who did go remote are returning to the office in greater numbers than headlines suggest.
Even for employees who can work from home, the future looks more hybrid than remote. Only about 15% of workers are now fully remote, whereas nearly 30% are in hybrid arrangements.
Much news coverage has portrayed the return to the office as management-led, with bosses demanding that employees give up work-from-home flexibility. And indeed, business leaders value in-person work. Our survey found that 86% believe the office remains an important driver of success. They see the physical workspace as important to company culture and collaboration.
Collaboration, socializing, job satisfaction
But employees also value the in-person experience. At least six in 10 employees want to be in the office at least three to four days a week, according to our research — a number that actually aligns with employer expectations. When asked to rank factors that draw them to the office, employees overwhelmingly chose “face-to-face collaboration” and “socializing.”
Other studies show that people experience more job satisfaction and higher productivity when they have friends at work. Zoom calls can’t replace the banter, coffee runs, drop-bys, and unscheduled lunches that forge bonds among workers. In fact, employees report feeling significantly lonelier when working from home.
The office also offers a clearer division between work and personal life, making it easier to unplug at the end of the day. And many remote employees, especially those just starting out, have found that they’ve missed out on the kind of mentorship and face time with bosses that can lead to promotions.
To be sure, there will be right-sizing reassessments as businesses adapt. Some tenants will need less space as they reduce the number of private offices in favor of open areas and “desk clusters” where teams can collaborate. Some may need more space to allow ongoing social distancing. More lounges and coffee bars that bring employees together may be on the way.
In short, the office isn’t some relic of a bygone, pre-digital age. It’s taking a dynamic central role in the future of business.
Henry Chamberlain is the president and chief operating officer of the Building Owners and Managers Association (BOMA) International, the leading trade association for commercial real estate professionals.
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