October 1, 2021
It's no secret that the COVID-19 pandemic disrupted how Downtowners traditionally work. Business leaders and employees around the country are evaluating what the future of work looks like. Different schools of thought have emerged as to what degree the pandemic accelerated inevitable trends like hybrid or remote work options. This is evolving rapidly, often weekly, due to concerns with the Delta variant. The DDA investigated these trends working in conjunction with Downtown employers and office building managers.
The original consensus, locally and nationally, was that return to office would accelerate in September as summer vacations wrap up and students return to school. Instead, the prevalence of the Delta variant led to a wait-and-see approach. Over the summer, the average of all Class A buildings surveyed was generally between 45% to 50%. As of 9/20/21, the average of all Class A buildings within DowntownFTL remains at the same level.
This investigation found that buildings with tenants that have already called employees back to the office reached up to 75% of workers back in the office. Buildings where a majority of tenants have not yet elected to return are back in-person at about 30% of pre-pandemic levels.
Current levels in DowntownFTL are 10 to 15 percentage points better than the national average. This is equal to rates seen in Texas and more than double rates seen in New York City according to a weekly tracker from Kastle Systems.
In DowntownFTL, government employees were quickest to return in-person, returning to the office months earlier than the private sector. Notable law and professional services firms have generally opted for hybrid work options through at least the end of the year.
The number of office workers in DowntownFTL is expected to be at about 70% to 80% of pre-pandemic levels for the near future.
The Future of Work Is Rapidly Changing
In the short-run, the most significant factor preventing a quicker return to work is the prevalence of the Delta variant. Nationally, financial services companies that originally hoped to return in September, have delayed to at least October. Leading tech companies have delayed to January 2022 at the earliest. Originally, top tech companies hoped to adopt a hybrid schedule starting in the fall. However, hybrid options are now expected to stay in place following the pandemic.
In the long-run, remote and hybrid work options are likely here to stay. A national poll of office workers from mid-August commissioned by The New York Times found that 55% of employees work prefer to work remotely in a partial or full-time capacity.
DowntownFTL Is Well Positioned For This Trend
DowntownFTL is well positioned to benefit from this trend due to a 41% growth in the residential population over the past decade and the construction of 900 new hotel rooms over the past 5 years. DowntownFTL is more balanced between office, residential, and tourism options. A short term shock caused by lower levels of in-person activity at the office is likely to be offset by the growing purchasing power of new DowntownFTL residents due to the rapid lease-up of new residential inventory, at a velocity of ~275 units per month according to a recent update by NorthMarq.
The DDA will continue to provide updates on return to work as trends evolve over the next few months.