No Post-Labor Day Bump For Chicago Offices As Commuting And Occupancy Fall
Children returned to schools across Chicagoland last week, but a post-Labor Day boost to the downtown office market didn’t happen. Worries over the delta variant’s rise kept many workers in their home offices, and how long the Central Business District will remain relatively quiet is still anyone's guess with several key metrics moving in the wrong direction.
The Metra trains that deliver suburban residents downtown each workday saw no significant boost in ridership, according to agency officials. There was even a slight drop on the first Tuesday after Labor Day when compared to the previous Tuesday.
On Tuesday, Aug. 31, 71,700 people rode the Metra rails, the agency found. One week later, on Tuesday, Sept. 7, fewer than 67,000 used the trains. Ridership over the next two days totaled 146,900, a slight uptick from the 144,200 from the same days during the week before. While that volume is far above the daily average of 7,200 seen in the spring of 2020, it’s still roughly 25% of ridership in July 2019.
A full or even partial recovery depends on the further spread of vaccines, and whether new variants emerge alongside the delta, according to Colliers International Executive Vice President Dougal Jeppe.
“We did have a number of clients that had indicated they wanted [employees to] return to the office post-Labor Day, but a decent number pushed that back to a ‘to be decided’ time,” he said.
Other cities saw similar patterns on public transportation. Commuter trains in San Francisco's Bay Area are carrying less than 25% of the riders they did pre-pandemic, according to a report in The Wall Street Journal. And subway ridership in New York City remains half what it was before Covid-19.
Although some Chicago-area commuters took to the highways after expressing worry about traveling on public transportation, parking garages also failed to notch a post-Labor Day boost. There had been a big jump in parking use earlier this year as vaccinations spread and the city began opening up, but garage use slid in September’s first two weeks.
In January and February, when much of the business in the city was restricted, parking transactions were less than half what they had been during the same months in 2019, according to Wen Sang, CEO of Smarking, a San Francisco-based firm that collects transaction data from more than 2,000 parking locations nationwide, including more than 50 in Chicago.
After the city fully reopened in June, a real recovery for garages took hold. By July, parking transactions were just 18% below the level seen in July 2019, Sang added. But instead of further improvement, the gap jumped back to 21.8% so far in September. The decline was even steeper for the monthly parking passes commonly used by commuters, which dropped 43% over September 2019.
The decline in traveling was matched by a stagnation in office occupancy. After a summer that saw vaccinations spread — and rising hopes that a corner had been turned — occupancy broke 30% on Aug. 19. Yet by Sept. 2, it shrank to 28%, according to data from Kastle Systems, a firm that makes touchless access systems and tracks office usage nationwide. That’s higher than New York, where office occupancy stands at 19.5%, but still below the national average of 30.9%.
Jeppe said it might be too early to judge how the return to office is going with so much uncertainty surrounding both the number of vaccinations happening each day and the number of new infections and hospitalizations. All these numbers are watched closely by downtown businesses, and changes for the better may lead some to pull the trigger and bring people back.
“Any improvements are likely to be incremental, and the numbers can change week-to-week,” Jeppe said.
New hybrid methods of working, where office workers may come in just a couple of days per week while staying home on Zoom for the remainder, could make it more difficult to judge true office occupancy, he added. There could be significant shifts in the number of commuters day-to-day if firms start scheduling important meetings in the middle of the week and let occupancy fall off again as the weekend approaches.
“I think things will start off slow, peak in the middle of each week, and then end slow,” he said.
Jeppe added he’s already seen signs that activity in Chicago’s downtown is picking up after the post-Labor Day disappointment.
“Anecdotally, I was in the Willis Tower food hall today, and I’ve never seen it busier,” he said on Tuesday. “There is definitely a bit more energy in the city today than there was on this past Monday.”
