As my favorite author is Anthony Trollope, the author of The Way We Live Now, I thought it might be a good time to take stock of where we are now and where we are going as the summer approaches.
Our economic forecasters at Wharton Property Advisors see the return to the office as a recovery in three phases. Following the acute stage of distress, the successful rollout of the vaccine created the platform for the first phase of the recovery which we have experienced in the last six months as Covid cases have fallen precipitously.
We are now entering phase 2 when the vaccinations are starting to hit a critical mass such that people are beginning to feel safe. With over 60% of American adults having received at least one shot, we can see many aspects of the economy which were the most adversely affected by the virus such as travel, entertainment and retail shopping and dining springing back to life. Unfortunately, there is one major exception to this resurgence which is the return to the office which is proceeding at a modest pace, particularly in New York City. Here, there is just an 18.2% employee office attendance rate as of June 2, exactly the same rate as the week before!
In the coming months, we will start to see a gradual return to the office for the remainder of the year which will pick up speed after Labor Day. As we head into the fall, New York will be in full swing – other than the office. Broadway will be back onstage, tourists will be visiting the city and the neighborhoods will be in full bloom. Most importantly, the schools will be open, which is an essential component to the recovery and return to the office. However, an issue of vital importance is whether employees feel safe. We can’t take our eye off the ball here. The story is not how to accommodate the minority of employees who want the personal freedom of not being vaccinated, which has been the focus of so much commentary and discussion. Rather, the key is how companies are going to accommodate the concerns of the majority of their employees who are vaccinated and want a safe workplace with other vaccinated employees. This is supported by a Harvard Business School online study taken in late March in the link below. The survey found that 71% of respondents were hesitant to go back to work until everyone is fully vaccinated. That is a key data point that should guide managers considering how to handle the delicate office return issue.
Accordingly, an important development to watch will be the number of companies that require vaccinations to return to the office. With the new Equal Employment Opportunity Commission guidelines issued on May 28, the government has clarified that employers may require vaccinations, with carveouts for disability which has a high level of scrutiny and religious exceptions. In my view, the pace of the return to office will be directly impacted by the percentage of companies that require vaccinations.
Thus far, employers have been treading lightly in this area so as not to offend employees who are reluctant to get the jab. However, those employers who are politely encouraging vaccinations may be emboldened if there are more court decisions like the recent federal district court ruling allowing Houston Methodist Hospital to require them. Of course, the issue of whether mandatory vaccinations should be permitted in a hospital is a relatively easy case. It will be very interesting to see if they are upheld by the courts if required by general office and factory employers.
Returning to our phases of the office return, the third is one that is devoutly to be wished, which is the de facto end of the pandemic when herd immunity is reached or close to being reached in densely populated areas. If all goes well and enough people are vaccinated, this could hopefully begin around the beginning of 2022 which is coincident to annual planning for many companies. That is also when we will start to know whether the change to hybrid work was in fact a true revolution, or just a temporary workaround.
As for that return which will be the last building block in the revitalization of NYC, progress will be slow and unspectacular as employees trickle back to the office with less than 100% of employees working there less than an entire five-day week. But fans of the office should not be discouraged; just like the old adage, slow and steady wins the race. Attitudes will inevitably shift somewhat once a critical mass of employees are back and the boss is happily ensconced in the corner office. Further, recent anecdotal evidence from the field indicates that managers who have just returned to their old stomping grounds are being reminded of the convenience of having everyone in one place, which they had forgotten while working at home for over a year.
When looking at the situation from 30,000 feet, the future is bright. I believe we will see a new business paradigm when all of this is over, and a new flexible working environment that is tailored to the needs of specific companies and their employees will be a major improvement. However, people will need still need to gather together in person for myriad reasons including creativity, collegiality and culture. Of course, each company is different and requires its own unique approach regarding what is best for that organization. And we can’t discount the importance of the other c word – commuting. Anyone who has passed a train station in the NYC metropolitan area and seen the largely empty parking lot during the week knows that many commuters can happily do without that experience.
Although I have said so before, it bears repeating that we have embarked on a great experiment in the world of work. I am confident that the creative tension it generates will result in solutions that ultimately result in a better workplace, even if it involves less office space. The form that the workplace takes has yet to be determined. Only two things are sure – the conventional wisdom is often wrong and change is certain.
So that’s the way I see it. More importantly, what do our friends and clients think? Please let us know.