The pandemic may have been the impetus for the work-from-home experiment, but advances in technology have enabled it to continue. With video conferencing, IM software, and 5G and fiber optics networks reaching the ruralest of neighborhoods, maintaining connections with fellow workers is literally as easy as clicking a button. As such, companies are rethinking their need for office space.
41.9% of weekday foot traffic has returned to office buildings across the U.S. relative to the week preceding the pandemic, up from 27.7% one year ago. (Avison Young)
Downtown businesses are taking a hit as workers spend less money near jobs. In normal times, a single worker spends as much as $15,000 a year on food, shopping and entertainment near their job in New York, or $12,000 in Alaska and California, according to the working arrangements survey. (Pew Trusts)
In New York City, the market value of office buildings fell $28.6 billion in 2022, bringing about the first drop in taxable values in more than 20 years. (Office of the NY State Comptroller)
In a memo sent to employees at Yelp, co-founder and CEO Jeremy Stoppelman announced the closing of offices in New York, Chicago and Washington, D.C., as well as reducing the footprint of the office in Phoenix, because less than 2% of the available workspaces were being used on a weekly basis. According to a company survey, 93% of employees and their managers say they can meet their goals remotely, and 87% report that working remotely has made them more effective at work. Moving the company to a fully remote model not only makes employees happier, it saves office costs, enlarges the employment pool and reduces the firm’s carbon footprint — all without impacting the quality of work.
So, a remote model is attractive for many companies, but what does it mean for the office sector? An interview with Wharton business professor Joseph Gyourko, posted on the Wharton Knowledge website, predicted changes on the horizon — and not all of them good. It isn’t just the office sector affected by work-from-home. “Cities are going to have to think about what they are going to do with the empty office buildings, and what they do when the real estate, the retail, the restaurants, the Starbucks around those buildings aren’t needed anymore,” Gyourko said. “They should start thinking of this as their responsibility to rehabilitate those areas now, and not later.”