Omicron Variant Throws Another Wrench Into Return-To-Office Plans

First delta, now omicron: Employers attempting to get their staff back in the office might kick the can down the road once again as a result of renewed coronavirus concerns. 

The delta variant of the novel coronavirus dashed the return-to-office optimism of early summer, forcing companies to put their plans on hold. Now, the new omicron variant is expected to do the same, some market watchers note, dealing another blow to return-to-office traction. 

Though omicron only burst into public awareness in late November, some office space experts are already seeing a shift in return-to-office sentiment.

"It's causing a general groan," Global Workplace Analytics President Kate Lister told Bisnow. "The feeling is, 'not again.' Most workers still haven't come back, and companies are trying to get them to come back, but people don't want to, and omicron will add fuel to that fire."

One of Lister's clients, a professional services company with about 4,000 employees, made plans to return all employees to the office by Jan. 1. Now, she hears those plans have been thrown into disarray.

Still, the exact impact of the variant on the office sector remains to be seen, with not everyone making decisions just yet. 

"I haven't heard directly from clients any plans to change their RTO schedules as a result of the new variant," said Sheila Botting, principal and president of Avison Young's Americas Professional Services division. "Likely our clients and major employers will wait for government and health guidance before changing any plans."

CBRE Vice Chairman and tenant rep specialist Paul Myers told the New York Post on Monday that it was too soon to gauge the impact of the omicron variant on office leasing in New York City. Still, he said he was hopeful it “will be even smaller than the minimal effect from the delta variant.”

Michael Keiser, a real estate analyst at a mortgage company in South Carolina, also hasn't heard of companies changing workplace strategies yet, though that could change.

"If they're uncertain about the new infection, my thinking is that companies currently in office or in hybrid mode will allow their employees to work from home beginning next week or the following to keep them protected during the holiday term, and also use it as a 'gift,'" Keiser said.

Even before the emergence of the omicron variant, employees were skittish about returning to the office.

In October, Randstad USA’s Next Normal omnibus survey found that nearly three-fourths (73%) of 1,200 American workers were concerned about workplace safety standards. More than 1 in 3 respondents (38%) want to see their employer require proof of vaccination before reopening a workplace, while a similar number (34%) consider the behavior of their co-workers their first or second concern about on-site work.

“After the uncertainty they’ve experienced over the last 18 months, American workers are signifying that they are still counting on their employers for stability and workplace safety,” Karen Fichuk, CEO of Randstad North America, said in a statement.

This notion was bolstered by a survey last month by workplace analytics company Humanyze, which found that 63% of the nearly 2,300 respondents lacked full confidence in their company’s post-pandemic workplace strategy, up from 46% who felt that way in pre-delta April.

The omicron variant — formally known as the B.1.1.529 strain of the novel coronavirus — has already inspired international travel bans, with the World Health Organization calling it a "variant of concern" on Friday and the Centers for Disease Control and Prevention following suit on Monday. 

The focus is still mainly on southern Africa, where the variant accounts for a majority of new cases, but on Wednesday, it was discovered in the U.S. for the first time. The CDC reports that a person in Northern California tested positive for the variant after returning to the U.S. from South Africa on Nov. 22. 

Some local governments are already changing their policies in response to omicron. On Monday, New York City issued an advisory strongly suggesting indoor masks, regardless of vaccination status. On Friday, New York Gov. Kathy Hochul announced that a state of emergency would to go into effect Dec. 3 because of an expected uptick in Covid-19 cases due to the variant.

The California and San Francisco Departments of Public Health said on Wednesday the state is increasing Covid-19 testing at California airports, especially arrivals from countries with reported omicron cases.

“If the omicron variant proves more contagious, more likely to lead to severe illness or more resistant to current vaccines, I would expect that many employers will extend the timeline on their return-to-the-office plans," said Bradford Bell, a professor in strategic human resources at Cornell University.

Given that scenario, the omicron variant could play out much like delta, with some employees gradually filtering back into the office some of the time while many companies postpone their full-scale return due to the unpredictability of the situation, Bell said.

Wells Fargo, for example, planned a full-scale return to the office for September 2021 but postponed it until January 2022 because of the delta variant. That plan hasn't changed yet, but a company spokesperson told MarketWatch on Monday that "we will continue to follow the science, as we have from the start."

After swelling 444% between June 2020 and August 2021, office demand dropped 30% nationally in October, according to the VTS Office Demand Index, which tracks new tenant tours of office properties in prominent U.S. markets. All seven U.S. markets analyzed by the New York-based software specialist have suffered declining office demand since August. 

Boston, Los Angeles, San Francisco and Seattle all saw drops in demand of more than 24%, VTS reported, while New York City, Chicago and Washington, D.C., saw drops of 10% or less.

The sluggishness in office demand might continue as the new year approaches and return-to-office plans are upended again, Bell said.

"Even those hoping to return employees to the office early next year have hesitated to specify a return date and instead have left it more open-ended," he said.

"It could very much be like what happened this summer, my clients are telling me," Lister said. "There's a sense that they might be wearing themselves out making plans for nothing."