As the city prepares to fully reopen amid a fall in COVID infection rates, the push is underway to get office workers back behind their desks.
But with the Manhattan office occupancy rate continuing to hover under 20 percent, at least one company has warned it will cut workers pay if they don’t get back into the city.
“If you can go into a restaurant in New York City, you can come into the office,” said Morgan Stanley CEO James Gorman during a virtual conference on Monday.
“If you want to get paid New York rates, you work in New York. None of this, ‘I’m in Colorado and work in New York and am getting paid like I’m sitting in New York City,’” Gorman added.
However, a new survey from the Building Owners and Managers Association (BOMA) International, Yardi and Brightline Strategies reveals that optimism around the return to the office is growing, mediated by tenants’ increasing clarity around the “new normal” of office and remote work practices.
More than 3,000 commercial office space decision-makers were surveyed by BOMA. While a large majority still see office space as being vital to their business operations, tenants recognize a shift in pre-pandemic practices.
Participants projected, on average, that fewer than half of their employees will work full-time in the office over the next 12-18 months.
“COVID-19 has created an inflection point across the commercial real estate landscape, and these study findings show the road ahead is going to pose different challenges and opportunities,” said Henry H. Chamberlain, president of BOMA International.
“The value and vitality of offices remain strong, and there is also tremendous opportunity for owners and operators to work collaboratively with their tenants on investments in building infrastructure, amenities, space designs and other features to create healthy, safe and productive workplaces.”
Among the study’s key findings are:
65% of respondents feel the United States is heading in the right direction on COVID-19 management (up 28% from the prior study in Q4 2020).
78% of respondents affirm their in-person office is vital to operating their business but indicate that the future use of their space will change.
Tenants anticipate a clear shift toward hybrid work options, as respondents reported the average amount of people working in the office full time would decrease from 70% prior to the pandemic to 43% over the next 12-18 months. Notably, they predict only about a quarter of the workforce (26%) will telework full-time/most of the time.
The number of respondents across tenant sizes reporting they will reassess space needs (56%) has decreased 5 points since the prior study, while those responding unsure has climbed to 37%, up from the 19%. Among those respondents reassessing space, 48% would reduce their square footage, amounting to 37% of all office tenants surveyed (down from 43% in Q4 2020).
Nearly 2/3 of tenants (64%) believe owners and operators should make additional space investments in either health and safety infrastructure and technology to potentially mitigate future health emergencies or wellness amenities, programming and platforms that support tenants’ efforts to increase organizational culture, connectivity, productivity and well-being.
86% approve of their property management company’s response to COVID-19 so far (vs. 77% in Q4 2020), demonstrating that commercial property owners and operators are delivering strong value to tenants in actively responding to the pandemic.
“More tenants embracing telework is an opportunity to craft office space that fosters increased in-person and remote productivity while serving as the hub for enhanced culture, communication and collaboration,” said Michael Broder, CEO of Brightline Strategies.
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