Top-Down Mandates Increasingly Seen As Only Way Workers Will Return To Offices En Masse
Incentives, flexible schedules and even a tightening labor market are all still failing to lure people back to the office — and the divide between workers and leaders isn't closing.
“We've seen all kinds of different remedies, not sure any are working,” Ziegler Cooper Architects Senior Principal Scott Ziegler said. “CEOs need to get some huevos and tell their employees that they hired them to work 40 hours a week and get back to the office. I think they've been very timid.”
At first, companies redesigned their spaces to provide more collaborative environments and higher levels of amenities with a hospitality focus. When that didn’t work, Ziegler said, they began offering set hybrid schedules, which has been largely unsuccessful, too.
“Work cultures in corporate America are in desperate need of getting people back to collaborate,” Ziegler said during a panel at the National Association of Real Estate Editors conference this week in Las Vegas. “We've seen a few CEOs [enforce mandates], and I think it's having some impact, but it's still not there yet.”
Nationally, office occupancy remains below 50% of pre-pandemic levels and has declined slightly since a high point in January, according to Kastle Systems data. While many argue the data doesn’t paint a full picture of the return to work, there is no doubting office workers’ interaction with their workplaces has been fundamentally altered. That shift has had widespread implications on cities.
In New York, for example, office leasing has slowed significantly — but residential neighborhoods like Greenwich Village are commanding apartment rents that are 30% higher than 2019. Similarly, Placer.ai data shows Downtown Los Angeles is seeing 30% less foot traffic than before the pandemic, but in the residential areas of South Glendale and Highland Park, foot traffic is nearly fully recovered.
But productivity is starting to wane after a remote-fueled spike at the start of the pandemic, said Amber Schiada, JLL's senior director and head of Americas Work Dynamics and Industries Research. Nonfarm business labor productivity decreased 2.1% in the first quarter of 2023, per the U.S. Bureau of Labor Statistics. Schiada said large technology firms will look at patent applications as one way to measure their success, and patent filings have been going down over the last few years.
"If you look at the last three cycles, the Great Financial Crisis, the Savings and Loan crisis, the dot-com bubble, productivity came back at a pretty similar rate,” she said. "And [now] we're kind of seeing that drop off a bit."
CEOs are under pressure how to best proceed — they want to preserve the output of the company, but many are concerned forcing people back in will do more harm than good, she said.
“If I were going to put it in baseball innings, I'd probably say that we're in the seventh inning kind of figuring out what that return to work and sort of hybrid reality looks like,” she said. “You’ve got employees that have this expectation, you've got CEOs that are trying to figure out what is going to be the carrot that gets people back, and there isn't one size fits all.”
In April, JPMorgan Chase told its staff all managing directors would be required to be in the office five days a week, and said “corrective action” would be taken if employees who worked on a hybrid schedule failed to meet in-office obligations. Amazon and Salesforce have also put return-to-work mandates in place. Those moves have been welcomed by the real estate community, which has been urging companies to bring their workers back.
“We think we have seen the peak in work-from-home, more and more CEOs are now requiring their employees back to the office,” Vornado CEO Steven Roth said on the company’s earnings call last month. “With each passing week, the office buildings feel more like 2019, and we believe it's just a matter of time before everyone is back for good. New York City seems to be leading the country in this regard.”
But Schiada said a requirement is a delicate line to walk, pointing to protest and walkouts from workers at some tech firm’s when mandates for the office were put in place. Nearly 2,000 Amazon employees walked out of the company's Seattle-area offices in protest last week over the remote work policies.
“Clearly there's a disconnect there,” she said, noting the labor market is still tight even amid announcements of mass layoffs. "It's still the case that we are sort of, you know, at this impasse where you've got employee expectations on one side, you've got CEO expectations on the other, and they're not really meeting in the middle yet.”
One approach she has seen work well is making sure all layers of the company implement and observe a set working model, whatever that model may be.
“I've seen companies that have been more successful in implementing that return to office strategy have been companies that still offer some of that flexibility, but they have a very strong mandate from leadership all the way down that's implemented and followed through on,” she said. “That is probably the biggest challenge today.”