On Fifth Labor Day Since Pandemic Began, Return-To-Office Rallying Cry Falls Silent

This will not be the Labor Day that finally draws everyone back into the office. And realistically, that day might never come. 

As the fifth Labor Day since the pandemic began passes, return-to-office proponents appear to have moved through the stages of grief, finally accepting that the end of another summer won’t convince stragglers to suit up and come in.

The holiday once brought bold pronouncements, creative cajoling and even threats. This year, office cheerleaders are mostly silent, settled numbers indicate a hybrid environment is working out for most, and while certain industries might continue to push mandates, office utilization will never be what it was prepandemic.

“The industry has accepted a new normal,” said Marisha Clinton, vice president of research at Savills.

Office buildings across the U.S. were about 63.7% as busy in July 2024 as they were in July 2019, according to Avison Young’s Office Busyness Index, a new measure of office occupancy that analyzes anonymized mobility data across 4,000 U.S. buildings. That is up from 52.9% in July 2023, but many researchers and employers say they aren't expecting another major boost this year or even next. 

In other words, this could be as good as it gets for the foreseeable future.

Most organizations have accepted hybrid working patterns as the new normal, CBRE found in its annual office occupier sentiment survey released in August. Sixty-four percent of occupiers surveyed said their office utilization patterns are steady. 

This is up from 60% of respondents in 2023 and 43% of respondents in 2022 who said they were at a steady state. 

Those numbers suggest office occupiers are largely done with denial, anger and bargaining, especially since employers can no longer blame a lack of office attendance on Covid-19 cases, said Vrinda Mittal, an assistant professor of finance at the University of North Carolina at Chapel Hill who has researched postpandemic work-from-home patterns.

“In 2021 or even 2022, we were thinking, ‘Is it the pandemic or is it the demand to work from home?’” Mittal said. “Now, in 2024, we can safely say that it is the demand to work from home.”

There is now no significant movement to get employees fully back into the office, according to a study conducted on behalf of one of the companies that benefited most from the hybrid work movement, Zoom. Hybrid work is king, according to the online meetings giant.

About 64% of respondents to an Aug. 23 Zoom survey said their workplace is implementing a hybrid model — the exact same percentage of organizations that told CBRE they are at a steady rate of office utilization. 

“About 64% of organizations say that ‘Yep, who is coming in is coming in,’ and about a third more say, ‘No, we’re still going to push the envelope,’” said Julie Whelan, global head of occupier thought leadership at CBRE. “But pushing that envelope isn’t as easy as it was.”

When occupancy was at rock bottom on Labor Day 2020, the Busyness Index sat at 18.4%, and it was easier to expect employees to return to the office. Time would pass, workers would recalibrate their routines, and employers would implement an office attendance policy and reasonably expect people to follow it, Whelan said.

There was never an expectation of full office utilization, though, Clinton said.

“Even before Covid, offices were never 100% occupied,” she said. “We're never going to get back to 100% of people in the office all the time. We will still see those waves of people, or the majority of people in the office Tuesday, Wednesday and Thursday.”

Some took immediate postpandemic office closures as an opportunity to be more flexible with their lifestyles and home bases. People became untethered from their office buildings, moved away from urban cores and minimized the relationship between office and work, according to the McKinsey Global Institute.

The population of New York City’s core dropped 5% between mid-2020 and mid-2022, and San Francisco’s dropped 7%, the report shows. And while those populations have rebounded, the relationship between work and office has not.

Since the start of the pandemic, office vacancy rates have been stubbornly elevated. The national office vacancy rate hit a record 20.1% in the second quarter, up from an average prepandemic rate of around 16.8%. 

Yet despite high vacancy, office utilization ticked back up. The Office Busyness Index hit a low of 10.7% in April 2020 and now sits at 63.7%, the highest since February 2020, according to Avison Young.

“It happened slowly, but it happened,” Whelan said of the return to the office. “Now we're at the stage where if organizations do not have the utilization that they want, there's probably something that's more of a systematic barrier in place that they need to diagnose and clear, and that doesn't happen overnight.”

Those barriers could include employees not understanding why they need to be in the office or a mismatch between executive and lower-level attendance expectations, she said.

But even overcoming those hurdles wouldn’t lead to a tidal wave of people returning to the office, and future gains are likely to nibble around the edges, sources told Bisnow.

Most employer-employee disconnects aren't extreme, Whelan said. Sixty percent of survey respondents said they want employees in the office at least three days a week, yet only 51% report that employees attend that often. 

“Employers want a little bit more than they're getting from employees,” Whelan said. “It's not like employers want five days a week and they're only getting one day a week. It's really like they want four days a week and they're getting three days a week.” 

Company policies and employee preferences will continue to evolve, said Harry Klaff, principal and U.S. president of Avison Young.

The “time has passed in terms of setting Labor Day as the ‘goal post’ for RTO efforts,” but the data shows increases in office busyness every September since the start of the pandemic, he said, adding he expects more incremental improvement going forward.

“These policies combined with the numerous benefits of the social and economic advantages of being in-person with work associates have proven efficacy given the +12% year over year increase in occupancy levels,” Klaff said in an emailed statement. “We expect this trend to continue in the future, albeit at an overall slower rate of change with variances among industry sectors.”

Return-to-office trends vary widely depending on industry and geography. The engineering, architecture, construction and building materials industry saw the highest ranking in Avison Young's index in July, hitting 81.9% of prepandemic office usage. The tech industry, which has suffered more than 400,000 layoffs since 2022, sat near the bottom at 54.2%. 

San Francisco and its large concentration of tech companies posted a 53.8% office utilization rate in July. The outer boroughs of New York City reached 87.2%, the highest in the nation.  

“If you have a law firm where you really want all of your employees in the office a majority of the time or a financial services company where you want the employee in the office the majority of the time, you're going to really push those mandates,” Clinton said. 

There is no one-size-fits-all approach to office attendance, she said. But the Zoom survey shows hybrid work prevails: 64% of workers follow a hybrid schedule of some kind. Remote work makes up another 19% of responses, and just 17% of respondents are in the office daily.

The Zoom survey stresses that the workplace is still evolving, and 75% of office leaders remain optimistic that it is moderately to very likely their organization will change their workplace models in the next two years. That hope is largely driven by the desire to increase productivity, with 84% citing that factor. About 62% of leaders also said they were motivated by being able to recruit talent more broadly.

It is reasonable and expected that office utilization will creep up again slightly as summer vacations wrap up this week, Clinton said. But it won’t be the postpandemic attendance wave office proponents once fantasized about. 

“Naturally, once we do get into the cooler months, the fall months, you will expect to see more people in the office,” Clinton said. “But at the end of the day, do not expect that to translate into a greater demand for space and then more leasing activity in the near-term, particularly given sluggish employment growth and continued uncertainty in the economy.”

UPDATE, SEP. 3, 12:59 P.M. CT: This article has been updated to better contextualize a quote.