Office occupancy across ten large U.S. cities was 48% on the week of December 14th, according to a report by workplace security company Kastle, which operates badge scanners at over 2,600 buildings in 138 cities.
On that week before the holidays, people checked in the most in Austin at 63.7% and the least in San Jose, in the heart of Silicon Valley, at 35.5%. New York was closest to the ten-city average at 48.1%.
The figure was near the highest tracked by Kastle since March 2020, when office occupancy plummeted from 95% to 15% with pandemic lockdowns. “Since the pandemic, the two biggest calendar events when there’s been a step up have been Labor Day and New Year’s,” Kastle’s chairman Mark Ein told The Wall Street Journal.
Mr. Ein predicted office occupancy will be between 55 and 60% in 2023. His company noticed 23% more people checked in during the peak day compared to the low day in the same week last December. It could mean people are working from home at least some days of the week if not full time, said Peter Grant of the WSJ in his article.
Living at the office
Typical office leases last 10 to 15 years, so office owners are only now starting to lose tenants as companies cancel renewals after years of paying for empty offices. There are over 200 million square feet for lease in major office markets, the most ever recorded, according to real estate data firm CoStar quoted by Grant.
Since housing in the U.S. is costliest than ever, people have looked at converting offices into homes. Turns out that at $400 per square foot offices are still twice as expensive as homes in most cities. On top of that, it can take an additional $400 per square foot in plumbing, wiring, and walls to convert an office into an apartment, Columbia professor Stijn Van Nieuwerburgh told Slate.
Because modern office buildings have a lot of space far away from windows, not every office can be turned into a home as developers did with old warehouses. And office buildings don’t become vacant all at once, but floor by floor as companies leave.
There was $1.2 trillion of debt backed by office buildings in June 2022, data firm Trepp told the WSJ. As interest rates go up to curb inflation, profits for office owners seem remote.
But how remote?
Some large tech companies like Salesforce have started to ask employees to show up at the office more often as they look to improve performance. It shows that remote work can be hard even if you have an aptitude for technology.
The Information tech news site reported last week that Facebook parent Meta has struggled to coordinate meetings of leaders spread in cities between Hawaii, California, other parts of the U.S., and the U.K., a span of 14 hours in time difference from end to end.
It took us three years at Verb to learn how to manage a six hour time difference between colleagues: we recommend anyone facing the same challenge to avoid relying on meetings, that old office habit. Instead, try Meta product WhatsApp.