The Next Crisis Will Start With Empty Office Buildings - The Atlantic - "During the first three months of 2023, U.S. office vacancy topped 20 percent for the first time in decades. In San Francisco, Dallas, and Houston, vacancy rates are as high as 25 percent. These figures understate the severity of the crisis because they only cover spaces that are no longer leased. Most office leases were signed before the pandemic and have yet to come up for renewal. Actual office use points to a further decrease in demand. Attendance in the 10 largest business districts is still below 50 percent of its pre-COVID level, as white-collar employees spend an estimated 28 percent of their workdays at home... Municipal governments have even more to worry about. Property taxes underpin city budgets. In New York City, such taxes generate approximately 40 percent of revenue. Commercial property—mostly offices—contributes about 40 percent of these taxes, or 16 percent of the city’s total tax revenue. In San Francisco, property taxes contribute a lower share, but offices and retail appear to be in an even worse state. Empty offices also contribute to lower retail sales and public-transport usage. In New York City, weekday subway trips are 65 percent of their 2019 level—though they’re trending up—and public-transport revenue has declined by $2.4 billion. Meanwhile, more than 40,000 retail-sector jobs lost since 2019 have yet to return. A recent study by an NYU professor named Arpit Gupta and others estimate a 6.5 percent “fiscal hole” in the city’s budget due to declining office and retail valuations. Such a hole “would need to be plugged by raising tax rates or cutting government spending.” Many cities face a difficult choice. If they cut certain services, they could become less attractive and trigger a possible “urban doom loop” that pushes even more people away, hurts revenue, and perpetuates a cycle of decline. If they raise taxes, they could alienate wealthy residents, who are now more mobile than ever. Residents making $200,000 or more contributed 71 percent of New York State’s income taxes in 2019. Losing wealthy residents to low-tax states such as Florida and Texas is already taking a toll on New York and California. The income-tax base of both states has shrunk by tens of billions since the pandemic began. Finally, turmoil in office markets threatens retirement systems and the portfolios of individual people... Landlords like to point out that “New York always comes back.” But some cities—like Detroit or Pittsburgh—never recovered from the previous waves of technological change. And even in New York, a comeback may take decades. In the ’90s, the internet helped cities come back. As the economy became more dependent on innovation and creativity, many of the largest and densest downtowns boomed. In 2007, the world’s preeminent urban economist, Ed Glaeser, called it a “central paradox of our time” that cities remain “remarkably vital despite ever easier movement of goods and knowledge across space.” Economists have been busy explaining this paradox up until the current crisis. As the theory goes, companies require the rapid exchange of ideas and specialized division of labor that large cities provide. In addition, companies want access to the largest possible talent pool, and top talent likes to live in large cities because of lifestyle considerations. The consensus among economists was that as technology and media expanded, economic activity would consolidate within a select few superstar cities. But even before COVID, the theory started to crack as some of the top-performing cities saw population decreases, tech giants started distributing their offices across smaller cities, and the office market was propped up by WeWork’s irrational, venture-capital-funded expansion... Many old buildings will have to be converted to other uses or demolished. Steve Paynter, a principal at the design firm Gensler, has been evaluating hundreds of office buildings across North America and estimates that as many as 30 percent of them could be fit for residential conversion. Other buildings could accommodate new uses, including health care, education, light logistics, and even data centers. To facilitate such conversions, cities must loosen existing zoning laws, streamline planning procedures, and provide tax abatements and other incentives. In the 1990s and early 2000s, New York City relied on this policy mix to convert 59 office buildings in lower Manhattan to more than 12,000 apartments."
US office prices headed for 'severe crash,' investors say - "The commercial real estate market is headed for a severe collapse due in large part to sky-high interest rates and declining property values, according to a survey of investors. Around two-thirds of those who responded to a Bloomberg News survey said they believe that the commercial real estate market will recover only after a crash... vacancy rates are at 30-year highs in many American cities. In New York City, the vacancy rate was 22.2% in Q1 of 2023."
Nearly one-third of Toronto office buildings ‘obsolete,’ Dream CEO says - The Globe and Mail - "“Probably 30 per cent of the space in downtown Toronto requires a ton of money, a lot of investment and it’s questionable if you put the investment in that the building will be worth enough to justify it,” he said. “That’s what I mean by obsolete – when you put a lot of money in but you’re not actually going to increase the value.”... In downtown Toronto, the occupancy rate was 88 per cent midyear versus 98 per cent in June, 2019, when tech companies and other businesses were desperate for space in the city... The rise in remote work has hurt office markets throughout Canada and the United States. The share of employees in Toronto’s financial core rebounded to about half of prepandemic occupancy levels by the spring, but has been stuck at those levels since... Commercial real estate brokerages have floated the possibility of turning some of the unwanted space into housing units. But it’s not feasible to turn many older buildings into condos given the lack of proper plumbing and other infrastructure for individual housing units. “Maybe one out of 20 buildings makes sense as a conversion,” he said, adding that the others should be torn down and new residential buildings should be built."
Grindr loses nearly half its staff to strict return-to-work rule - Los Angeles Times - "Grindr has lost about 45% of its staff as it enforces a strict return-to-office policy that was introduced after a majority of employees announced a plan to unionize... Chief Executive George Arison told investors at the Goldman Sachs Communacopia + Technology conference in San Francisco this week that more staff attrition is expected as a result of the mandate, which will be financially advantageous in the near term... Amazon.com Chief Executive Andy Jassy has amped up his rhetoric, telling staff members who refuse to comply with the company’s mandate for in-office work three days a week that “it’s probably not going to work out for you,” according to an Insider report. AT&T told 60,000 managers that they must report to work in person at one of nine locations, which some employees view as a move to reduce staff. Return-to-office mandates hurt employee engagement and staffers’ ability to do their best work, according to research from real estate broker Cushman & Wakefield"
Study: Adding 20 Minutes to Your Commute Makes You as Miserable as Getting a 19 Percent Pay Cut - "In England, the average daily commute time has risen from 48 minutes to 60 minutes in the past 20 years and one in seven commuters spends at least two hours on their daily round-trip commute. The average commute time in the US is less, at around 50 minutes round-trip... Dr. Chatterjee's research underscores multiple studies that suggest commuting can be more stressful than actually working, and that the longer your commute, the less satisfied you may be with your job and with life in general"
Author Malcolm Gladwell slams working from home - "Author Malcolm Gladwell thinks that remote work is hurting society and that a recession will likely drive employees who are “sitting in their pajamas” back into the office. The bestselling author of “Blink” and “The Tipping Point” grew emotional and shed tears as he told the “Diary of a CEO” podcast hosted by Steven Bartlett that people need to come into the office in order to regain a “sense of belonging” and to feel part of something larger than themselves. “It’s very hard to feel necessary when you’re physically disconnected”"
Finance firms' return-to-office crackdown could backfire - study - "Of 700 financial executives surveyed by Deloitte, 66% who worked remotely part time said they would likely quit if they were ordered to return to the office five days a week... Even among the large Wall Street banks, views have differed. JPMorgan Chase, Goldman Sachs and Morgan Stanley have been prominent advocates of in-office working for learning, innovation and culture. By contrast, Citigroup, UBS and Bank of New York Mellon have embraced more flexibility as a way to attract and retain talent... Poll results showed almost half of women in senior leadership roles were likely to leave their current employer over the next 12 months."
Workers are creating a ‘dead zone’ between 4-6 p.m. to fit in COVID-era habits like school runs and gym sessions - "It's easy to see why workers are keen to keep up the COVID-era habit, which can promote work-life balance. Those with families are using that time to do the school pick-up, run errands and have dinner on the table in less of a hurry. Meanwhile, others are finding time for leisure before work depletes them of their energy and capacity for fun—by 4 p.m. on weekdays, golf courses are packed, according to a Stanford University study. Plus employees aren’t dodging work to kick their feet up for the rest of the day. They’re logging back in on their laptops after hours to finish their work. The result is a "triple-peak" day, in which workers’ keyboard activity spikes in the morning and afternoon, then a third time around 10 p.m. Microsoft researchers who coined the phenomenon predict the pattern is here to stay... While many workers will experience the benefits of flexible hours, there are downsides too—namely that the boundaries between “office hours” and everything else has become thinner. “The third peak should be an available option for people who need it, but the challenge moving forward is, ‘How can we make sure people are not working 24/7?’” Shamsi Iqbal, principal researcher on productivity and intelligence at Microsoft Research said... Plus, for those working with or managing people who work all hours, the workday can feel never-ending... “Scheduling meetings has become difficult, and I’ve learned: Do it in the morning and never on Friday,” Maria Banach, a pharmaceutical operations director in Oregon told the WSJ."
A baby boomer who quit his 6-figure job rather than return to the office says managers are threatened by remote work and just want people back so they can see them working - "Dennis C. would rather retire than return to the office full time — and that's exactly what he did... Some remote workers are living like college kids again, using their afternoons for leisure activities or errands, and then picking work back up later in the day. "The more choice we have, the more autonomy we have, I think, the happier we are"... in April 2021, Dennis was called back to the office. The company wanted him to come in for three days a week. Dennis, who was technically eligible to retire and had already been looking for new roles, said it was the straw that broke the camel's back. "When they said that I was going to have to come back, I sent them an email saying I'm retiring," he said. Dennis had already secured a job offer elsewhere as a defense contractor. With the new role, he'd be taking a slight pay cut, bringing his salary from six figures to a little less. But since he receives new monthly retirement benefits from his old federal job, he's still technically bringing in more than he was before. His new role is also fully remote, a must-have for him. He said that it's been, in a word, "fantastic." Dennis isn't alone. Felicia, an administrator in Arizona, previously told Insider that she too was leaving behind a six-figure salary over a forced return to the office. Her bosses were suffering from productivity paranoia and could not believe that people working from home were actually working. Dennis said that he thinks the only people who fully fail at remote work are those who went to meetings in person, walked around with a piece of paper, and looked busy — but weren't actually getting much done. But self-starters and motivated people with goals can excel with remote work. But remote work also calls into question the purpose of a boss, he said. A boss's model, whether they voice it aloud, is to make sure their employees get work done... Even as remote work has fallen off slightly in the near term — the Bureau of Labor Statistics recently found that nearly 73% surveyed of companies offered little to no telework in September, compared to 60% surveyed in 2021 — Dennis still thinks it will slowly take over, especially as office leases expire."
Why we will miss the office if it dies - "What hurt so unexpectedly was not leaving a profession and a set of colleagues. It was leaving a physical place of work with its familiar habits and familiar doorman — it was leaving an office... The office was a mainstay of my life. It not only provided me with a place of work and material for articles, but gave me routine, structure, amusement, purpose, many friends and a refuge in times of trouble. It was where I went to pass my days. The office was my rock... My love for offices may be partly because I was introduced to them in the 1980s, at the end of the golden age — pre-technology, pre-uniformity, pre-health and safety. It was a time of cast-iron typewriters, smoking at your desk, heavy drinking at lunchtime, canteens selling spotted dick, tea ladies and cake trolleys. But what I really remember are characters... Modern offices, by contrast, are usually dull: Quiet, boozeless and impersonal with their ergonomic chairs, glass-walled meeting rooms and half the people working from home. But, even so, we need the office as much as ever. The most important thing — which should make the office less an employer’s white elephant than its biggest bargain — is that it gives work its meaning. Most of what passes for work in offices is pretty meaningless, and the best way to kid yourself it matters is to do it alongside other people intent on doing the same. Even in interesting jobs like journalism, meaning comes largely from physical proximity to your colleagues. After six weeks of writing in her own bedroom, one friend reports: “I’m churning out the same old articles as before, only now I no longer give a crap”. Without an office, without a body of people beavering away at the same place and time, it is hard to know how a company could ever create any sort of culture or any fellow feeling — let alone anything resembling loyalty. The office helps keep us sane. First, it imposes routine, without which most of us fall to pieces. The uptight schedule of most offices forces even the least organised person to establish habits. Even better, it creates a barrier between work and home. On arrival we escape the chaos (or monotony) of our hearths; better still, we escape from our usual selves. One of the beauties of the office is its artificiality — it demands a different way of behaving, a different wardrobe and even a different language. Having two selves with two different outfits and two ways of being is infinitely preferable to having just one: When you get tired of your work self, return to your home self. Offices are also the funniest places in the world. The flipside of the idiocy of management is the hilarity and cynicism of workers... When cynicism failed, there were always pranks. I remember being called one morning by an incandescent CEO about a critical article I’d just written on his company. I prevaricated, oblivious to the fact that the caller was not the CEO but a colleague ringing from the other side of our office — much to the amusement of everyone else. In time, I forgave him. In fact, I came to see it as so funny that I married him. This was yet another function of the office: It was highly likely to furnish you with a spouse. People who had failed to find partners at university or through friends generally picked one up at work. It was all so easy: You would go out for a drink at the end of the day and then one thing would lead to another. The fact that the decline of the office and the rise of online dating have gone hand-in-hand isn’t particularly surprising. Short of marriage, offices from the beginning of time have been great places for lust... In 21st-century offices, where meddling is not only discouraged but illegal, invisible lusting is probably as big as ever. It gives interest to an otherwise dull day. In addition to providing real husbands, offices provide work husbands too. I had seven of these in the course of almost four decades and can confirm that the office spouse is one of the best relationships ever invented. They are the default option for a sandwich at lunch, someone who supports you in all matters, someone to gossip with. It’s like a real husband, only better because you don’t fight over whose turn it is to unload the dishwasher. There was a study done proving that people with office spouses were happier, more loyal and worked harder. Which is no surprise to anyone who’s ever had one. A final benefit of the office occurred to me in the past six weeks: It is a great leveller. Yes, the boss tends to get the best view, but everyone is in the same office building with the same common spaces... In my old life I was always irritated by the homily “No one ever said on their death bed: I wish I’d spent more time in the office.” I now understand why that jarred so badly. To wish for more office time is an entirely reasonable thing to say with your dying breath. I spent over three rich and happy decades in offices. I fear that my children won’t get that chance."
Quiet quitters are getting quiet fired in silent workplace war - "Managers are agonizing over what an office full of quiet quitters means for productivity, and for some that’s translated into taking on a portion of their employees’ workloads to make up the loss. Four out of 10 managers in Toronto say they’re putting in extra time and effort because staff under the age of 30 are doing less... we’re witnessing a silent war play out between employees and their managers, some of whom are fighting back in their own passive-aggressive way by “quiet firing” the quiet quitters. Quiet firing subtly freezes out an employee by either avoiding one-on-one conversations, refusing to provide feedback, neglecting to share critical information needed to do a job, passing them over for a promotion or subjecting them to stingy raises — or no raise at all — while co-workers are awarded more. That may sound pretty extreme, but the practice appears to be more common than you’d think. Most workers say they’ve either experienced it or seen it play out in their workplace, says a recent poll by LinkedIn News. Meanwhile, one in three managers in the United States say they’ve actually gone the “quiet firing” route... The effect can be demoralizing for an employee, which is exactly the point. “Eventually, you’ll either feel so incompetent, isolated and unappreciated that you’ll go find a new job, and they never have to deal with a development plan or offer severance”... This “quiet” war could be a direct consequence of working from home. Remote work seems to have broken something fundamental in the employee-employer relationship: good communication. A large swathe of the workforce appears to have forgotten how to speak to one another, and even approaching a co-worker for a quick conversation during in-office days has become frowned upon. There’s another buzzword for that: “desk bombing.” For some, getting unexpectedly greeted by a colleague has become as anxiety-ridden as having to talk to someone by phone. Meanwhile, managers say remote and hybrid work has made it very easy for employees to fly under the radar, and working from home is a “breeding ground” for quiet quitters, according to Robert Walters Canada. But the recruiter says the solution is simple enough: bring people back into the office more often."
Tech giants who made remote working possible now turn their backs on it - "In 2010, China’s largest travel agency did something unheard of. Trip.com, now worth $23bn (£17bn), launched an experiment to see if employees were as productive working from home as they were in its Shanghai call centre. Of the 503 volunteers, Trip.com sent home 249 for nine months. By the end of the pilot, productivity had increased by 13.5pc, and time spent answering calls rose 9.2pc. The home workers felt more satisfied with their jobs, and sick days and churn decreased. Impressed with the results, it offered every employee the chance to work from home. Then something even stranger happened: two thirds of employees declined, and half of the home worker volunteers asked to return. Despite initial satisfaction, “concerns over the loneliness of home working and the lower rates of promotion” began to play on the home workers’ minds... Technology hardware companies are more open to remote working and are considering closing many of their offices, Wreford says. Their high percentage of sales employees means they are more open to continental hubs where people will go a few times a month for sales briefings. In contrast, executives at software companies want to bring workers back in because they believe the office is key to their identity, differentiating them from other code warehouses. Indeed, many of the most recognisable names in tech have invested in lavish offices. Their headquarters in Silicon Valley, London and Dublin stop short of being full-blown shopping centres. Many are crammed with hidden speakeasies, games rooms and hairdressers. These perks separate Uber, Facebook, Google and Apple from competitors, even if the tedious coding work is often the same. Technology companies know that organic snacks and a free massage stop eyes wandering in a highly competitive technology market. "Companies like Amazon may believe that since most of the workforce has to live with controlled work situations it would be difficult to strategically manage a hybrid model where some are fixed in place and others have much more freedom," says Gena Cox a human resources consultant and founder of Feels Human. But trust also plays a huge part. "Some employers simply have not created cultures of trust; leaders who don’t trust employees don’t get trust in return. That limits their perspective; they think control is the only thing that works."... Mercer research found that 83pc of employers found productivity was the same, if not better, as employees worked from home during the pandemic. But it also found that employees were working three hours longer each day, with 41pc reporting increased shoulder and neck pain."
Google and Amazon shun remote working and tell staff to get back in the office - "Google has told staff they must get formal permission to work remotely for more than 14 days a year after the pandemic ends if they want to work internationally, in a sign that major employers are losing faith in the policy... The move comes after Google's finance chief Ruth Porat said in November that the company had no plans to open the offices sooner than June because “working from home is working”. She added: "There is a productivity lift from not needing to come into the office"."
Opinion: Office-less companies risk alienating Gen Z - The Globe and Mail - "A study released by Microsoft in March bears out the idea that working from home is more difficult for Generation Z (those born since 1997) than for other generations. After surveying 31,000 workers, the company found that although Gen Z workers were slightly more likely to apply for a job with some remote options, rather than one that was completely office-based, as a group they had many misgivings about working from home. Many were more stressed than older peers and said they felt isolated working alone. They often lacked the space or money to create good workspaces for remote work. As a group, they had difficulty feeling engaged or excited about work and found it difficult to get in a word during meetings or bring new ideas to the table."
The evidence is in: working from home is a failed experiment - " the results of a recent, large study from Microsoft. According to the study, almost two-thirds of the more than 31,000 full-time employed or self-employed workers across 31 markets said that they were “craving” (yes, craving) more in-person time with their teams and 37% of the global workforce complained that their companies were “asking too much of them” when out of the office. About 54% of these people feel overworked and 39% are simply exhausted. Thanks to these new working from home arrangements, meetings are significantly longer, “chats” have risen 45% and 41m more emails were sent in one month alone (February 2021) compared with the same month last year (remember when email was supposed to be “dead”?). While older workers and bosses seem to be handling things in stride (61% of them say they are “thriving” right now, a number that clocks in at a whopping 23 percentage points higher than those without decision-making authority), the younger generations – specifically the Gen-Zers (aged between 18 and 25) – are struggling to balance work with life and are simply more exhausted than their counterparts. They reported difficulties feeling engaged or excited about work, getting a word in during meetings and bringing new ideas to the table. Worse yet is the killing of innovation. Microsoft reports that companies have become more siloed than they were before the pandemic. And while interactions with our close networks have actually been more frequent than previously, the fact is that even these close team interactions have started to diminish over time. “When you lose connections, you stop innovating,” said Dr Nancy Baym, senior principal researcher at Microsoft. “It’s harder for new ideas to get in and groupthink becomes a serious possibility.”... Unfortunately, the work from home trend is too strong to resist. That’s because there’s this illusion of more independence, flexibility and control over one’s life which is probably why 70% of the workers who participated in the Microsoft survey, despite all their concerns, still desire some type of flexible work options in the future. There are also powerful interests at work to keep us at home. Big tech firms like Microsoft, Google, Amazon and Apple love these arrangements because it ties their customers even further to their cloud-based collaboration subscription models. The giant media providers see more people at home clicking on their content. Big retail firms are enjoying the surge in online sales driven by bored, unsupervised workers. And corporate employers are sniffing big savings in real estate costs as well as the ability to hire better (and cheaper) talent regardless of geographic limitations. And yet, study after study shows that people working from home are more stressed and less happy. The model has proven to create more disruption, less productivity and diminished innovation."
Almost one in four want to work from home forever - "Almost one in four workers hope never to set foot in the office again, with 7.5m people keen to permanently work from home every day of the week. At the same time slightly more (28pc) are desperate to get back and hope never to have to turn their kitchen or spare bedroom into a home office, according to a new survey by Deloitte... Most under-35s find home working challenging, indicating the difficulties involved in a short-term pandemic measure becoming a permanent state of affairs. Will Gosling of Deloitte said: “Those coming into the workforce, in their early careers, are sponges. They can learn technical stuff anywhere, but what gives them the edge and what makes work interesting and exciting is the stuff you cannot learn in a textbook or an online course. “It is how people work and interact. It is observing how more experienced people handle different situations. You cannot teach that directly. People in the early stages of their career know that, and they are yearning for it.”"
Howard Levitt: The boss is going back to the office and you should too - "If — a big “if” — employees maintain the quantity and quality of their work, employers reap the benefits at reduced overhead. There will be savings on everything, from rent, fewer office supplies to a reduced need for positions such as office managers. How many office managers do you need when the office is working remotely? Businesses will employ the “hotel” concept. There will no longer be assigned workspaces. Instead, employees who must attend the workplace for meetings will book an office space or boardroom... Should an employee agree to work remotely? This is not necessarily a good idea, particularly for those who want to advance their career. All organizations have a centre of power and it isn’t in the “cloud.” There is usually one individual who is the nominal head and those who have trusted personal relationships with that “Boss” form the centre of power. By powerful, we mean individuals with the authority and ability to influence careers. Employees want, or should want, to be one of those trusted few. These kinds of relationships are difficult if not impossible to foster online. Being far from the centre of power can be damaging to an employee’s career. The more an employer encourages an employee to work remotely the less important that employee is seen to be, and the more difficult it will be for that employee to advance. This is not new. As long as there has been work, being sent to the “minors” or the satellite office has been recognized as deleterious. It is no different because an employee is exiled virtually instead of physically. After all, who is more likely to get promoted? An individual who has developed a personal relationship with their superior? Or an employee who, at best, is seen occasionally online at predetermined times. Likewise, when it comes time to cut staff. Who is going to be retained? Employees are constantly surprised when relationships trump merit in promotion and dismissal discussions. Jamie Dimon, the chairman and CEO of JP Morgan Chase agrees. He recently commented that working remotely “does not work for young people.” It doesn’t work for those who “want to hustle.” In other words, if you are working from home you are just not that important."
Jamie Dimon Says Work From Home ‘Doesn’t Work’ For Young Staff, Management - Bloomberg
Companies drop plans to sublease space as more workers want to return to the office - The Globe and Mail - "employees report they want to return to the office, at least for a few days a week... “About a year ago, [employees] said they were great with working from home. Now we are finding that the majority of them want to come to the office,” said Roula Vrsic, Intelex’s senior vice-president of marketing. “It is not lost on us that people want to see others,” she said... “The workplace has lost the diversity of opinions and the value of water cooler talk,” Ms. Vrsic said."
Canadian workers are ready to come back to the office - "Half of respondents said they’re more productive and effective in a virtual work environment. That was a drop from 59 per cent in a similar survey a year ago, suggesting that 14 months of work-from-home arrangements are taking a toll on some employees... Among KPMG’s findings: Sixty-three per cent say they want to return to a physical workspace or office. KPMG partner Leigh Harris said that’s consistent with other research showing the pandemic is affecting Canadians’ mental health “and many feel overworked and burnt out” by the pandemic. Nearly half of those polled are worried they could be discriminated against or overlooked for job opportunities if they keep working remotely."