The Fight Over Return-To-Office Is Getting Dirty
The war between remote workers and companies just started.
Once upon a time, I worked in downtown Fort Worth. The place was buzzing with employees running to their offices before 8:00 am. Today, the place is filled with vacant offices, empty spaces, and deserted streets.
The city of Fort Worth is not alone.
America’s offices are emptier than at any point in at least 40 years, reflecting a decade-long trend of overbuilding and changing work habits that has been further accelerated since 2020.
Economists and real estate investors appear to be caught off guard by recent events, but I’m not surprised. They may not have noticed the signs, but there has been a noticeable shift in employee behavior over the past decade. More and more people have been asking to work from home, and we’ve seen the emergence of remote companies, like Basecamp and Buffer, that don’t require physical office spaces.
Many factors drove these changes:
- Technological advancements such as improved internet access, collaboration software, and cloud-based tools have enabled employees to work from anywhere they choose.
- Work-life balance is becoming increasingly important to employees, and remote work offers them benefits that traditional office environments cannot provide.
- Employees value flexibility in their work arrangements and often prioritize the ability to work from home or other remote locations.
- Many employees view remote work as a desirable alternative to traditional offices due to issues such as office politics, long commutes, and inflexible schedules.
- Poor leadership can also contribute to employee dissatisfaction with traditional offices. Some leaders may be micromanagers, lack communication skills, and fail to create a sense of camaraderie among team members.
These types of leaders make remote work more desirable to good employees worldwide. Therefore, before addressing the shift in employee attitudes towards the office, it is essential to acknowledge the elephant in the room: the lack of competent and confident leadership.
The impact of these changes.
According to a report by Moody’s Analytics, more office space is currently vacant in the United States than at any point since 1980.
This is mostly due to the massive shift in how employees work, live, and play.
With many workers shifting to hybrid work models, the traditional five-day-a-week, 9–5 office life has been replaced by working remotely from the comfort of their homes. Moody report also notes that this cultural change has heightened the office space surplus of supply built in the 1980s and 1990s.
Moody’s Analytics reported that the national office vacancy rate rose 19.6% in the fourth quarter of 2023. This is the largest quarterly increase since the first quarter of 2021 and is larger than the 19.3% level reached twice in the past 40 years.
In 2019, the average office vacancy rate was much lower.
Unintended consequences of remote work.
The negative effects of vacant offices and high-rise buildings go beyond the employees, employers, and property owners. They also impact landlords, restaurant owners, retail shop owners, and every small business in the country that depends on foot traffic.
Empty high-rise buildings and office vacancies are damaging to landlords, restaurant owners, retail shop owners, and every small business in the country that relies on foot traffic. Fewer people frequent local companies such as restaurants, cafes, shops, and other services in the area when offices are empty.
This reduction in foot traffic can lead to a decrease in consumer spending, which can impact the revenue of these businesses. Also, local service providers catering specifically to office spaces, such as cleaning companies, catering services, office supply stores, and transportation services, may experience a decline in demand or even face closure due to reduced business from empty offices.
Many CEOs fit into these categories: real estate investors, property owners, restaurant owners, and other service businesses who rely on these offices being filled to make money, so they came out and opposed remote work since the beginning.
CEOs who have voiced concerns and skepticism about remote work.
- Elon Musk, CEO of Tesla, has labeled remote workers lazy and demanded that his employees work at least 40 hours per week in the office. He told CNBC, “I’m a big believer that people are more productive in person. People should get off their goddamn moral high horse with their work-from-home b*******.”
- According to David Solomon, the CEO of Goldman Sachs, employees must come to the office five days a week to foster team culture and impromptu collaborations. It should be noted that Goldman Sachs owns a 44-story building in Manhattan, and keeping it vacant can negatively affect the company’s revenue generation.
- Jamie Dimon, the CEO of JPMorgan Chase, feels that remote work impedes the development of culture and spontaneity, demanding a ‘balanced’ approach with some in-office involvement. Last summer, Dimon told the Economist, “I completely understand why someone doesn’t want to commute an hour and a half daily. Totally get it… That doesn’t mean they have to have a job here either.”
The war has just started.
This is a real dilemma for many companies.
Companies believe working from home can negatively impact their company culture, decrease employee morale, minimize collaboration, and create challenges when onboarding and training new employees.
On the other hand, employees find remote work very beneficial as it can improve their work-life balance and overall job satisfaction.
Some CEOs benefit from employees returning to the office, so I want to know your stand on this issue.
What are your thoughts?
