Office Foot Traffic Data Reveals Companies Adjusting to 'New Normal'

Foot traffic data from major US cities supports the proposition that companies are adjusting to a more permanent view of hybrid work, according to a new analysis from Placer.ai.

The company’s data reveals that the office recovery hasn’t been consistent across metros: while visits to offices in San Francisco, New York City, and Chicago are still significantly below pre-pandemic levels, year-over-three-year office visits in San Francisco were down by -67.8%, compared to 40.6% and 45.7%, respectively, in New York and Chicago.

Placer.ai’s Bracha Arnold says San Francisco’s pandemic-era population decrease may be partially to blame and could explain why the metro is showing a slower office market recovery.  On the flip side, foot traffic to New York and Chicago office buildings “seems to be slowly but surely bouncing back—and major companies are betting that offices in the city will continue their comeback,” Arnold writes, noting that Google and Facebook recently snapped up space in New York City, while Google is poised to finalize an office expansion project in Chicago. 

Though the year-over-three-year data is bleak, Arnold also notes that year-over-year data is more promising. Specifically, May 2022 office visits to San Francisco, New York City, and Chicago are up by 90.6%, 65.7%, and 57.6%, respectively, year over year. 

“This shows that while the traditional, 9-to-5, five days a week office model may not be returning in the near future, workers haven’t fully abandoned office life,” Arnold says.

And month over month data is even more encouraging: in San Francisco, New York, and Chicago, MoM office foot traffic was up seven, eight, and ten out of the past 13 months, respectively. Visits jumped in February, despite a shorter month, after a short decline in January due to the Omicron spike. Month over month traffic in New York and Chicago was up in April 2022 again as well. 

“While the popularity of hybrid work may be preventing office buildings from reaching their full pre-pandemic occupancy rates, foot traffic data indicates that a partial return to the office is definitely underway,” Arnold says.

The reshuffling could have big implications for valuations, however: a joint research team from NYU and Columbia University recently posited that office buildings will lose 28% of their value by 2029 if remote/hybrid work patterns become the norm. The researchers say they documented large shifts in lease revenues, office occupancy, lease renewal rates, lease durations and market rents as firms shifted to remote work during the pandemic. Their study of the NYC office market produced an estimated value destruction of $49 billion by 2029.