Occupancy is an engine of local economies and there’s an unprecedented glut of space available.
A Glut of Office Space
The Wall Street Journal reports Big Cities Can’t Get Workers Back to the Office
More than two years into the Covid-19 pandemic, exasperation is growing among business, city and community leaders across the U.S. who have seen offices left behind while life returns to normal at restaurants, airlines, sporting events and other places where people gather. Even after many employers have adopted hybrid schedules, less than half the number of prepandemic office workers are returning to business districts consistently.
The problem is most pronounced in America’s biggest cities. Nationally, office use hit a pandemic-era high of 44% in early June, while cities like Philadelphia, Chicago, San Francisco and New York have lagged behind, according to Kastle Systems, which collects data on how many workers swipe into office buildings each day.
From April 2020 to March 2021, 26,300 New York City small businesses closed permanently, according to a report the mayor released in the spring. Available office space in New York has grown to about 125 million square feet, up from 90 million in the first quarter of 2020, according to data firm CoStar Group Inc. Retail rents in Manhattan have declined for 18 consecutive quarters, starting well before the pandemic, according to commercial real estate services firm CBRE Group Inc.
One issue for workers in big cities is time spent in transit. New York, Washington, D.C., San Francisco and Chicago have some of the nation’s longest commute times—as well as some of the lowest return-to-office rates, according to a Wall Street Journal analysis of the country’s 24 largest metropolitan areas in May.
More than 25% of the employers surveyed by Gartner at the end of March said they were providing free lunch or snacks to workers to lure them back to offices. Five percent said they were subsidizing or reimbursing commuting costs.