Vacant offices bring major policy problems

Posted on April 20, 2022

Among workers whose jobs can mostly be done at home or another remote location, about 60 percent now prefer they not come back to the office. The coming transition of millions of jobs away from company or government offices will substantially affect downtowns and other office areas.

If you work on city or municipal policy, take notice! Your cities, towns and office park areas will be losing commercial tenants. There will be smaller lunchtime crowds and fewer customers for downtown retail businesses. It will hit your tax base. On the other hand, it may somewhat relieve traffic congestion and lower rental costs.

Here’s the big picture. About 40 percent of U.S. jobs, employing more than 60 million Americans, can be done remotely all or most of the time. According to Gallup polling, before the pandemic among remote-capable jobs, 8 percent were done at home and 32 percent engaged in “hybrid” work, that is, some combination of in- and out-of-the office. In 60 percent of remote-capable jobs, employees were working entirely at company or government offices. Today, remote-capable jobs are done 39 percent at home or other remote location and 42 percent hybrid. Only 19 percent are done by working entirely in employers’ offices.

Here’s how the New York Times put it:

The last two years ushered in an unplanned experiment with a different way of working: Some 50 million Americans left their offices. Before the pandemic, in 2019, about 4 percent of employed people in the U.S. worked exclusively from home; by May 2020, that figure rose to 43 percent, according to Gallup…[and] among white-collar workers, the shift is stark: Before Covid just 6 percent worked exclusively from home, which by May 2020 rose to 65 percent.

Let’s consider an example. In the District of Columbia, only about 36 percent of office workers are going to the office, the rest are working remotely. Many will come back eventually, but perhaps half or more of those who currently work remotely or hybrid will not return to their offices full-time. Small communications-oriented businesses and nonprofits have already abandoned their D.C. offices. On top of that, because of COVID, more than 18 percent of office space in D.C. has no tenant at all—the highest vacancy rate ever.

The fact is, remote work has been possible and practical for years now, but it made employers uncomfortable. Now that the pandemic has demonstrated what works and what doesn’t, there is no reason to go back to the olden days. For employees, remote work means avoiding time-consuming and costly commutes, being more available for family and personal needs, generally less stress (at least for introverts!), and greater productivity for many. For employers, remote work can mean lower office-related costs.

But for jurisdictions, especially office-heavy cities, it’s a big problem that requires some serious thinking and revised urban planning. The areas that are focused on daytime office workers—including office parks and corporate headquarters—will see less demand for restaurants, bars, retail, gyms, etc. It may also lessen the need for security and custodial workers. It will shed customers from public transit and may diminish the demand for urban housing. And it will likely cut tax revenues.

Millions of workers are not going back to the office. Now we all have to deal with it.