Hopes that Return to Office will bail out the office sector of CRE seem premature: Data on office attendance and Working from Home.
By Wolf Richter for WOLF STREET.
The good folks in commercial real estate, including institutional investors, have been saying for over a year that the Return-to-Office mandates will scuttle Working-from-Home and fill up office space and boost the office sector out of its epic depression.
The media have jumped all over it with breathtaking headlines every time a company mandated a full five-days-a-week RTO, and enough companies have done so to keep these stories percolating, such as Tesla in 2022 already, then Amazon, Goldman Sachs, J.P. Morgan, Morgan Stanley, X, Dell, etc. Lots of times, these in-office policies come with the explicit or implicit threat of “or else.” And the Trump White House has been in the news with its battle trying to force it to happen with whoever will be left working for the government.
But those media reports may be giving the wrong impression, and in fact very little has changed since the beginning of 2023 in terms of actual office attendance and the percentage of full paid days worked from home – which is what should matter to the CRE industry, rather than the breathless media reports. So we’ll look at these two data sets.
Office attendance has barely ticked up in two years.
Kastle’s weekly back-to-work barometer – which tracks how many people enter an office building for which Kastle provides the electronic access system – has barely ticked up since the start of 2023. Its weekly barometer measures office occupancy as a percentage of what it had been before Covid. So if pre-Covid levels of office occupancy come back, the barometer would rise to 100%, meaning same occupancy as before Covid, the good old days, so to speak.
But far from it. The average occupancy in the top 10 office markets in the latest week was still only at 54% of where it had been before Covid, so still down by 46% from pre-Covid, and only a few percentage points higher of where it had been at the same time in 2023, and just a hair higher than at the same time in 2024.
In the chart, the top gridline = 100% = pre-Covid level. The 10-city weekly average (red line) has been around 50% since the beginning of 2023, sometimes over, sometimes under. During the latest week, it was 54%, with Houston being at 65% at the top end and Philadelphia being at 44% at the bottom. The epicenter of WFH, San Francisco, was at 45% (chart from Kastle, click on the chart to enlarge it):
The prevalence for hybrid work shows up in the huge difference between the days of the week with the lowest occupancy, which for the month of January was Friday, with an average occupancy rate of 37% of pre-Covid levels, according to Kastle. The day of the week with the highest occupancy rate was Tuesday at 63%.
The average occupancy on Fridays in January was 28% in San Francisco and 30% in New York City. Even at the high end, in Houston, it was only 48%.
No decline in the share of WFH in 2023-2025.
Another data set shows the same principle from a different angle: The share of full paid days worked from home had spiked by mid-2020 to over 60%, in part because companies with office workers switched to WFH, and in part because other employment that could not be shifted to WFH, such as in accommodation and food services, collapsed. During that time, tech workers switched to full WFH and kept their jobs, while restaurants and hotel workers weren’t working at all.
But as the economy reopened, those service workers were called back, and the share of WFH as a percent of overall full paid days plunged. But for office workers, WFH has remained a big factor. As a result, the share of full paid days worked from home remains at far higher levels than before Covid and has not come down further in 2023, 2024, and in January 2025.
This according to the ongoing study and data collection by Jose Maria Barrero, Nicholas Bloom, Shelby Buckman, and Steven J. Davis, published by WFH Research (based on the original paper: Barrero, Jose Maria, Nicholas Bloom, and Steven J. Davis, 2021. “Why working from home will stick,” National Bureau of Economic Research Working Paper 28731).
In January 2025, over 29% of all full paid days were worked from home, up a hair from the Januarys in 2023 and 2024.
So the share of WFH has given up about half of the Covid spike (which peaked in June 2020 at 62%) and then got stuck at a share that is roughly four times higher than it had been in 2019 (7%). While the author say that they may over-sample people who are “more tech and internet savvy, especially among the least educated,” the trend still works out about the same.
Of all full-time employees, 13% were full WFH in late 2024, while 26% were in a hybrid-WFH situation, so about 39% were at partially or fully WFH, according to the study. The remaining 61% were working fully on site.
WFH and hybrid arrangements dominated in these six industries, particularly in Information, which includes a lot of tech and social media companies, where only 28% of the full-time employees worked fully on site.
Percentage of full-time employees working fully on site, in a hybrid situation, or full WFH:
- Information: 28% fully on site, 51% hybrid, 21% full WFH,
- Finance & Insurance: 33% fully on site, 40% hybrid, 27% full WFH
- Wholesale trade: 44% fully on site, 40% hybrid, 15% full WFH
- Professional & business services: 45% fully on site, 30% hybrid, 24% full WFH
- Utilities: 49% fully on site, 28% hybrid, 23% full WFH
- Real estate: 49% fully on site, 40% hybrid, 11% full WFH
Hopes that RTO will bail out the office sector seem premature.
Turns out, many companies have stuck with hybrid work, often involving hot-desking, hoteling, and other arrangements, such as Google (3 days a week in office), Microsoft (50% of the time), Apple (3 days), Starbucks office workers (3 days), Adobe (2-3 days), Meta (1-2 days), etc., though they’re enforcing those days in the office more strictly, including on an “or-else” basis. Countless smaller companies have moved into the same direction.
And many many other companies, including Nvidia, Airbnb, Coinbase, Drobox, etc., and lots of smaller companies, startups, etc., whose employment is growing rapidly, have no RTO mandate at all. They have finetuned their WFH policies, created meeting places, and made lots of other adjustments to make remote work productive. For the company, it saves on office expenses, and it makes hiring good talent easier since WFH remains immensely popular. And it seems to be working for them.
But the media don’t write breathless headlines about companies’ sticking to and refining their WFH policies. These companies dedicated to WFH just don’t get that kind of screaming attention. And these companies wouldn’t do it if it didn’t work for them. So these hopes in the CRE industry that RTO will somehow refill offices and bail out the office sector seem premature.
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IMO, from what I see in Hawaii, the State gov’t is the worst offender. The past 4 years has seen the poor performance of State workers literally drop off the face of the earth.
here’s OPPOSITE DAY
today rode by NEW Industrial SPEC development of 100,000SF+-
SPACE AVAILABLE
had to be on 5-10 Acres
in Industrial area
——-
in my eastside RESIDENTIAL area have more STORAGE space being built
WE KNOW family – they ‘earn’ $500,000,000 MONTHLY
always looking for MORE COMMERCIAL INVESTMENTS
we can’t compete
If the company I work for, $120b biotech pharma company is any indication, this trend is about to change for the worse soon, as far as RTO goes.
Will be getting a mandate from the CEO this Thursday, return to office 3 days a week or risk performance and pay impact, previously 3 days a week was the guideline but wasn’t strictly monitored. No longer the case now, I have a feeling this year the tide will turn and 5 day RTO will be the target by next couple of years unfortunately
For every company using it to reduce headcount, there are companies using it as a way to lure in talent.
Remote and hybrid working was a huge one off benefit provision to workers. Some businesses will now want to claw that back, seeing it as that. But there are many others who will use it in place of other benefits such as higher salaries.
That’s why stats presented here are so much more important than narratives that media outlets such as WSJ try to push.
True, I think another factor will also be down to how much leverage the employer think they have, if the employment market takes a turn for the worse rapidly, they might want more than 3 days or allow WFH period.
It’s a little comforting to see the data is not showing significant change with WFH and to my original post, maybe I am wrong in fearing this will get worse based on what I see at my company alone. Time will tell
Phoenix_Ikki,
But that leaves you still working from home for two days. You’re still not 5 days a week in office. WFH persists even at your company.
@Wolf, correct still 2 from home but I fear the pattern, before it was 2 days RTO, then 3 and now 3 with strict enforcement. It’s nature to expect 5 days is the next evolution especially when fancy HQ in Foster City is not being fully occupied
Our son works for city-youngest finance manager(29)
most are in 40’s 50’s
reports to dept head, but given his assignment when new ERP systems implemented – he designs custom reports, processes
—-
last week he needed to take vehicle to shop, and me vice-versa
had to wait since DIRECTOR of city needed complicated budget report
and given his under $100k position he is over used
he loves it, but I know he needs to be paid 50% more
however he won’t go, due to healthcare benefits for wife/child
I also work for a hi tech company, with 100s of B in market cap.
CEO has mandated RTO 4 days a week minimum.
And what if you don’t comply?
1) Fire all these employees? Highly doubtful since they would need to fire their best. And if they can afford to lose their best over this, there are bigger issues with the business.
2) No raise and no promo? Wait until somebody figures out how to sue based on this.
Yes
A lot of people has been let go
And more compliance based lay off coming
It’s the same story with other fang employers.
Company is monitoring not only badge in but to exit you need to badge out as well. It means badging out is monitored as well
Using simple analytics It’s be easy to find out who is trying to outsmart the system
here’s different subject but related to economy
Washington Federal Bank ended all MORTGAGE ORIGINATON effective jan 17, 2025
what?
bank not lending
Poor Phoenix_Ikki, he will have to work like everybody worked before the pandemic: five days a week in the workplace. WFH was an emergency measure because of the pandemic, it was not supposed to be a permanent change in lifestyle. Some, probably a few, can successfully WFH. It looks like many companies have decided too many took advantage of it and it is back to work as usual. But don’t worry, it has been this way for over a hundred years. Show up to work or get fired.
If employees are “taking advantage of it”, that’s on management for not doing their jobs.
Threshing and winnowing the grain from the chaff of today’s news, thanks WR!
So RTO is a failing scheme to save CRE. Whoda thought.
My first guess is that all the noise of the WFH mandates not showing up much in the office occupancy rates data indicates that WFH is layoffs lite. CEOs know that Wall Street loves productivity (talking tough I guess does this) and hates layoffs. WFH is a win-win, especially in tech where there is always the new thing and the only olds are in the c-suite.
Also, interesting that hybrid seems to be the standard. I imagine the reason for this is avoiding commutes, that drain the worker but don’t do anything for the company. Fun to think about what autonomous driving will do in the future. More leisure time? Less?
They will be the first to be replaced by AI or a foreign worker.
Non US workers are getting better training and doing better work. All for a fraction of the cost.
funny thing you mention AI
I’m mushing my head for how to utilize
I take in may PROFESSIONAL sources
and for once(I’m Programmer type) has someone convinced me to try AI adaptor
morning TAYLOR(swift) I need to write report on xyz topic Z+
please provide me with basic 5 page report
zingo – now I have idea on what to write on
so may possibilities
——
funny thing is I’m going to PAY FOR better AI product
$20 month = nothing given devaluation of fiat $dollar
For us it was 2 days per week in 2023, 3 days in 2024 and rumors are we go to 4 days in 2025.
Looking at public transport stats that does seem to be a general theme. Definitely an increase last year, but not back to pre pandemic yet, but it’s slowly getting there.
anecdotally, i’ve heard of many remote workplaces order people back in a few days a week, but i haven’t heard of many hybrid workplaces order people back full time.
Washington D.C. is in a major crisis as all Federal workers have been told to report to work in the office or get fired. The roads here cannot handle the traffic as it is, and now they are going to dump 100,000 more commuter cars on the road. I don’t know how we are going to get into the city to do the work we have to do inspecting houses for the VA. To add to the misery, they’ve converted at least 20% of the lanes to bike lanes and there are major construction projects which lead to road closures all over the city. It’s going to be a nightmare. It’s the top news story here.
What a poorly thought out policy. Guess votes have consequences. Enjoy your commute!
I wonder if San Francisco experienced as great a retail collapse during the Great Depression as it has in the past few years. The latest prominent store that is having a going out of business sale is Bloomingdale’s in what used to be called Westfield Mall. As of this morning, most of the retail space in the mall appeared to be empty.
Department stores are dead meat nationwide. The culprit is Ecommerce. Most of the department store chains, from Sears on down, filed for bankruptcy. Most of them were liquidated, and they’re gone. There are only a handful of chains left. One of them is JC Penney which filed for bankruptcy but got bought out of bankruptcy by mall landlords to keep their malls alive. Every year, department store chains have closed hundreds of stores for years, the surviving ones, from Macy’s on down. Zombie malls dot the nation until they’re bulldozed and redeveloped into housing. These big malls turn to zombies after the anchor stores close, usually department stores. The lenders to malls have lost huge amounts of money. I have called this the brick-and-mortar meltdown since 2016, and it keeps on giving until all these brick-and-mortar department stores are gone.
But the online sites of some of the surviving department stores are thriving, such as Macy’s.
Westfield’s is closing or walking away from or selling ALL of its malls in the US. It started this process by walking away from two malls in Florida a couple of years ago. It finally walked away from its mall in San Francisco. But it’s only news when it happens in San Francisco, LOL?
I covered all of this stuff here — read these articles instead of posting nonsense:
https://wolfstreet.com/tag/brick-and-mortar-meltdown/
Sales at brick-and-mortar department stores nationwide:
I don’t think you can blame it all on e-commerce. I think some of it is the lack of wanting to socialize because politics have made people hate each other. I think the other part of it is retailers missing shifting consumer tastes. I’m the case of Sears, Eddie lampert saw it as just a real estate deal with no intention of saving the brand which still had a lot of value with all the brands they owned. Eddie really should have ended up in jail imo.
Well, yes, ecommerce made it very easily possible to not ever have to go to a department store again. I always hated big stores, always hated shopping. What a huge waste of time and energy. And frustrating too. As a result, long before the internet, I bought much of my stuff, from dress shirts to furniture, by catalogue and phone. Worked fine, but it was much harder or impossible to shop around like you can online, and you had to wait for a month or longer for this stuff to arrive. Shopping is a huge waste of time. I can spend 15 minutes online, shop around, and buy my stuff, and then go hiking, instead of ruining my Saturday by going from store to store. So the internet was a godsend for people like me. And eventually everyone figured it out. And that’s what you see.
In terms of the department stores, and other retailers, the weak ones got taken out first, then the less weak ones, then the stronger ones, etc. The remaining stores of the few surviving department store chains will eventually all close, but some of their ecommerce sites will survive and thrive.
I haven’t been to a mall in the last 10 years. The Westfields Mall near me used to be a regular hang-out for me when I had nothing better to do. All the stores I went in there like Radio Shack, Photo shop, Hot Shops, etc have all gone out of business. The businesses that are left cater to teenie-boppers, rich bored house wifes, and other losers. Food court has nothing but fast food and junk food. Crime and shoplifting are the only things happening there anymore. There is nothing in there for me. I do all my shopping on-line or in thrift shops. If and when this mall shuts down, I won’t lose any sleep.
I’m almost at 5 years of 100% telework minus a handful of in person meetings I needed to attend. Fingers crossed that this continues but worse case I see is 2-3 days max. Makes no sense to return to office given half the team would likely be out and then it is hard to collaborate in person. I literally don’t remember what it is like to be in office but certainly don’t miss it. Plus right now there is literally no extra space so the cost would be significant. I also get a small telework stipend which is funny as I would pay to keep 100% given the time and money I already save.
Those who successfully, according to their bosses, worked from home will continue to do so. Those who fked around were either fired or forced to work at the office the first year after the pandemic. So, it is not surprising there has been little change over the past few years.
When employees work from home, supervisors and managers can’t walk around and see all the folks playing on their computer, checking stock prices or other non-productive activities that the “stay-at-homer’s” are most assuredly doing. Thus, management can’t gauge how much fat they have to cut. This is management’s primary function when they are not in BS meetings. This doesn’t have a thing to do with saving CRE.
Management’s primary function outside of meetings is to snoop over their employees’ shoulders and micromanage? Maybe if you hire garbage employees, which you probably do, because anyone with real knowledge and skill would choose to work elsewhere, for someone who actually knows how to lead.
If last night’s superb owl ritual was an indication of what’s coming from the Eagle, Phoenix, the old order is out and the Executive branch doesn’t need either the judicial or legislative branch…they will be simply ignored…the amount of waste and graft is beyond alarming as US aid is rightfully scuttled…only 4 years…need to move fast…emergency surgery
Let’s sacrifice our democracy for a few billion that will go from medical and scientific research, towards a tiny percentage of the costs of corporate tax cuts and a symbolic yet non functional wall. The dollar will still spiral but US will lose relevance as we discard our scientific edge.
Anecdotal:
1. State of Ohio just ordered everyone back 5 days starting in March
2. If you head over to Reddit, you’d think the world was ending due to RTO mandates.
3. My clients have been slowly, but steadily, getting the majority of their staff back to the office 4-5 days per week. If anything what I’m seeing among my clientele (primarily 50 – 250 employee organizations) is greater flexibility to allow work from home when needed (childcare, contractor, feeling under the weather, etc.).
4. My company has been fully in-office, but we keep very flexible – most people work at least one day from home.
A happy employee is a productive employee…overpriced zombie bad lighting office buildings are a relic of times past..extend and pretend is over, take the loss, be grownups, move on and demolish the dinosaurs…
I have been WFH for 5 years similar to Glen. There have been rumors of RTO where I am now but I am hoping to dodge and stay home. The area I am in is mostly remote and spread across the country anyway.
I left my last position when they started to switch from WFH to hybrid. We were called in one day per week and I could tell they wanted more. The RTO was a morale and productivity disaster. Output dropped about 50% and the in office day was mostly goof off time with everyone depressed that they needed to be there. We were sitting in a room together on teams calls, etc.
So I left.
Yes, they need you back in the office so inefficient idiots can talk your ear off about sports or whatever irrelevant BS they want to waste their day yapping about when you’re trying to get work done. Imagine the costs of lost knowledge, hiring worse employees, and spending months or years trying to get them back to where the better employees they alienated were at before they quit. Most pushing RTO will pat themselves on the back without opening their eyes to the damage done. And the hard workers will enjoy greener pastures.
Our business has all support employees (clerical and IT) working from home, 12 people, we have done this for years, with great success and no issues, we retain people better because they don’t have to commute, and can do tasks at home or child care in between. The RTO managers are making an error and will lose many excellent people.
Remote work is a global phenomenon because alotta smart people work from home…
Howdy Folks. Some work from home folks have other paying jobs too. Its possible they are going to lose both jobs and you would have even less folks needing that office space….Always takes a long time for real estate bubbles to deflate.
The Kansas City Chiefs have lost 3 super bowls to teams located in the 30th state, 27th state and 2nd state being Pennsylvania adding to 59 like super bowl 59…perfectly scripted by the numbers…
The stock bubble/everything mania continues on, so so does pretend to work from home.
Wolf is full time WFH + overtime!
I guess he doesn’t have to worry about parking or obnoxious ride share drivers! No need to worry about car accidents on the way to work or road ragers flipping him off.
Wake up Wolf – another commenter suggested you add the word ‘look’ to your work.
“Look Wolf, you missed the work ‘look’. 😁
Wolf is fast asleep at his desk with his head on a tiny pillow. Too many hours, Wolf.
What did Jack Nicholson say – “All work and no play make Wolf a dull boy.”
You could hire me as your proofreader, but then I’d have to work away from home!
Looks like all these RTO mandates by those with investments in Office CRE isn’t working out too well for them now. I’m glad to see it. They kept building office space in cities even when there was ample available office space before the pandemic hit.
I have been wfh for about 6 years now. I work part time, I like the flexibility and will push back my retirement as long as I can have this arrangement. The work is pretty heavy R&D and everyone in the small company is wfh.
I just replaced my WFH data compiler and analyst with an AI project that a computing intern worked on the last few months for generating reports. Now looking at what else we can streamline. Feels exciting actually.
Lots of family households have cut their vehicle inventory down 1. The additional cost of insurance, repairs, and maintenance is substantial part of budget. I guess these folks will be back in the new car market shopping for vehicles. We all work for someone, I guess many may not have a choice but 2 RTO. The swamp in DC will continue to be a 3 ring circus for next 4 years. There is powder keg brewing in CA, IL, and NY. 🇺🇸 is the #1 soap opera in the world right now.