The New Office Normal Has Much Lower Utilization Than in the Past

Office occupation has gone up a bit since March 2020, but it increasingly looks as though a new normal isn’t going to include old rates of people in office buildings.

The Partnership for New York City released a report based on a survey of 160 big Manhattan office employers to ask to what degree their workers had come back to the office.

“As of mid-September 2022, 49% of Manhattan office workers are currently at the workplace on an average weekday, up from 38% in April. Only 9% of employees are in the office five days a week. The share of office employees that are fully remote dropped from 28% in April to 16% as of mid-September. Return to office rates are projected to increase gradually through the rest of 2022, with 54% of workers expected in the office on an average weekday by January 2023.”

This isn’t the first study that’s come out. The topic is too big for employers and property owners. Cushman & Wakefield recently compiled some of what they’ve learned from surveying employees. There were problems with the methodology—it took close to two years to pull in all the data, as if no one’s responses would have changed in the interim. That aside, though, employers and employees were light years apart from one another.

“Our survey indicates that 44% of employees want to go to the office periodically, up to two days a week,” the Cushman & Wakefield results said, not hosannahs for a full return to cubicles. And a little more than half of those employees who wanted to go back were interested in socializing.

And with the new Partnership survey we see a similar dynamic. Less than half show up on a given day. Less than a tenth show up every day.

“Although further office utilization gains are likely, as employers codify and compel employees to adhere to in-office attendance policies, a return to pre-pandemic levels is not likely,” says Fitch Ratings about this newer study. “Based on comments from industry practitioners, we believe office utilization was roughly 70% for key markets, such as New York City (NYC), prior to the pandemic, reflecting some inherent friction caused by worker absences due to external meetings, vacation or illness.”

Fitch analyzed what it would take to get back to that old office attendance. It would need to be 100%, something that hadn’t been the case for a long time. And even a 5% to 10% lower office demand “would result in sustained pressure on occupancies and economic rents, including leasing incentives.” And that also assumes half of the extra space companies have would remain leased. It seems unlikely that big employers will such an approach to keep their landlords satisfied.