A New Work-From-Home Movement Is Gaining Steam. Why Aren't Office Landlords More Worried?

A chasm is widening between owners and occupants of office real estate around the country. Though the coronavirus pandemic has thrust thousands of companies into remote work, office landlords are counting on most of them eagerly returning to their now-deserted offices. Given how well many companies report the forced experiment has gone, data shows that many tenants won’t be obliging.

About a third of U.S. employees were working remotely as of last month. In the meantime, a number of third-party reports on how many workers and companies prefer that it stay that way — either on a part-time or full-time basis — portend at least some long-term impact on commercial real estate, ranging from measurable to transformative.

By the end of April, 69% of companies had plans to shrink their office footprint in accordance with increased remote work, according to a CoreNet Global survey. Similarly, a survey of over 300 chief financial officers by Gartner, an S&P 500 research and advisory company, found that 74% of companies intend to shift at least 5% of their workforces to remote work. For most of those companies, at least 10% or 20% of workers are expected to remain remote.

A preference among many employees has also become more apparent, especially for remote work on a part-time basis. Four out of five employees in a global Colliers International survey conducted in late March said they would like to work remotely one day a week or more beyond the coronavirus crisis. 

That openness to remote work means less office space, Gartner Vice President Brian Kropp said.

“Without a doubt, there will be a decrease in office footprint needs. It’s just a question of how much,” Kropp said. 

Before the coronavirus pandemic, about 10% of workers that could do remote work did so full time, and an additional 20% did remote work at least some of the time, according to Gartner. Now, CFOs Gartner surveyed indicate the former figure will rise to 19% and the latter figure to 29%.

That number could be even higher. If 37% of the millions of jobs in the U.S. can be performed entirely at home, as predicted by University of Chicago economics professors Jonathan I. Dingel and Brent Neiman, millions of workers will be going into the office less, if at all.

Kropp said he expects a 50-50 split between the number of those who come into an office full time versus those who work remotely at least part time, representing a change from the 70-30 split seen before the pandemic.

“The majority of people will still be coming into an office, and a lot of people will still be coming into the office at least occasionally,” he said.

“But there’s not a scenario that we see, as we’ve looked at the decisions finance and HR executives and CEOs are already making, where every company is going to bring all of their people back," he said. "There’s going to be a decrease in need of companies for the same corporate real estate footprint."