Why Is Office Occupancy Only 31%?

Everything from movie theaters to hotels are filling up. Why office return plans are still falling short on the ‘return’ part. 

People are returning to the movies—nearly 60% of theaters are now filled. Airline capacity is  90% of where it was pre-pandemic. And restaurants in big cities are booking weeks in advance. But when it comes to returning to the office, the numbers are not quite so high.

Indeed, they are remarkably low—and falling. The latest data from security-data firm Kastle Systems shows that just 31% of workplace seats in the top 10 cities were occupied earlier this month. That’s down from a high of 40% just before the Omicron variant hit the world before the end of 2021. The number suggests that firms still have a long way to go to change people’s mindsets and to create a more inviting office culture—at least inviting enough to overcome the hassles of commuting or worries over safety issues.

From the start, companies have struggled with return-to-office plans, and many corporate leaders believe that this has become one of hardest challenges in the post-pandemic era. Many firms that set deadlines were repeatedly thwarted by new pandemic waves, while others never experienced the hoped-for critical mass of colleagues returning on their own. Some industries, most notably banking, have succeeded in ordering employees back, but most sectors are too strapped by labor shortages and the Great Resignation to risk losing more staff with such mandates.

Part of the issue, perhaps overlooked as people return to other venues, is safety. The time spent at the movies is a fraction of the working hours spent indoors at an office. “We still have highly transmissible variants circulating in the community and killing about 2,500 people a day, so I think there’s reason for both workers and their employers to be cautious,” says Nathan Blain, the global lead for People Cost Optimization  at Korn Ferry. “That’s what we’re seeing.”

To be sure, in some pockets of the corporate world offices are mostly occupied: the same Kastle data shows law firms at nearly double the national average occupancy rate, at 56.7%, which may well be close to their full hybrid occupancy, given that attorneys are widely working on hybrid schedules But the vast majority of commercial office space is predominantly vacant of human beings. Elise Freedman, senior client partner in the Workforce Transformation practice at Korn Ferry, is not surprised. The word she hears from executives most is caution. “A number of companies are leaving it up to employees’ comfort levels,” she says. “Employees just don’t feel safe yet being out and about and having a lot of daily exposures, especially in cities.” Many companies, Freedman says, are still designing their long-term office plans.

Make sure to use the correct metric, experts say. “Our patterns have changed,” says Blain, and so too should what we’re measuring. Blain suggests tracking how many people are coming in vs. how many are expected to come in on a given day. That he says, would provide a more meaningful metric. “Full” hybrid occupancy on any given day might be 40% to70%.

As for safety concerns, Blain advises slowly luring employees back into the office using low-key “pilots,” such as pilot meetings or pilot team-office days. “The more that office days are inserted into our routines, the more comfortable people will be with them,” he says. “It’s good to start getting people back into routines.”

Addressing office logistics should be a priority, says Freedman. That begins with dealing with one critical-mass problem: when the support staff who handle things like tech issues and printer paper orders is not present daily, employees are unable to do basic things like print or make coffee. “It’s not ideal or comfortable for those who need to work there,” she says. Why would employees opt to work in a low-resource office when home is comfy and easier?

Freedman expects a number of months to pass before companies approach their full-occupancy rates. In the meantime, she advises that companies make returning attractive by explaining two things: their rationale for a return to the office and what they are trying to achieve. “Employees want to know, and then they can plan accordingly,” she says. Dead silence is to be avoided, Freeman says, but thoughtful punting is fine--such as leaders saying they are still watching COVID numbers and will come back with more information in a month. “People just want to have the sense that a plan is being figured out,” she says.