Return to Office Trends November 2023

The gradual rebalancing of intensely employee-favorable labor market conditions, in addition to an increased emphasis on productivity and operational efficiency amid market headwinds, is driving a persistent wave of companies adjusting hybrid policies in favor of greater office attendance. 30 different companies employing over 900,000 office-based workers in the U.S. issued office attendance directives in the third quarter, and previously announced policies went into effect for over 1 million workers in September, the highest volume in any month in 2023. Policies continue to shift among major technology employers, with firms like Zoom and IBM issuing attendance requirements during Q3, and other major employers taking efforts to increase compliance with existing policies,. The legal sector is emerging as a leading office-centric industry with many large firms gravitating around a four-day attendance requirement: since Skadden Arps’ four-day mandate was issued in June, Davis Polk, Ropes & Gray, Weil Gotshal, Osborne Clark, Vinson & Elkins, and Sidley Austin all followed suit with four-day attendance requirements, impacting more than 15,000 attorneys in the U.S. Outside of the private sector, federal government agencies are under mounting pressure to formalize return-to-office plans for hybrid employees, and while more than a dozen agencies have issued new policies, federal workers’ unions have signaled their intention to push back against requirements and may be successful in softening or delaying policies, especially where agencies struggle to recruit and retain talent. While the vast majority of office policy evolution is shifting in favor of more physical attendance, there are some isolated groups that are expanding flexibility as a recruitment tool in especially tight labor markets. In September, Samsung’s North American semiconductor division announced a decrease of office attendance requirements to three days a week in efforts to retain extremely scarce semiconductor talent. With September’s mandates in effect, hybrid has become the dominant policy for major employers – roughly 80% of Fortune 100 employees work at hybrid companies, with the majority of those requiring three or more days of attendance per week, and an average requirement of 2.9 days across the entire index. There is some evidence that companies may attempt to opportunistically increase attendance quotas over time: Disney, USAA, Boeing, Blackrock, and most recently Nike, all started with three-day requirements for hybrid employees but have increased requirements to four days in 2023. In the 2023 KPMG CEO Outlook survey, 64% of respondents believe hybrid schedules will transition back to pre-pandemic attendance frequency by 2026.

The large volume of attendance mandates effective in September has already led to record post-pandemic attendance rates: the Kastle badge swipe index in major markets reached its highest level the week of September 18 at 50.4 percent, and the highest single-day attendance rate of 59.8 percent on Wednesday of that week. With nearly 500,000 employees subject to attendance mandates that will take effect between October and January 2024, attendance is expected to continue to incrementally rise through year-end, with average attendance rates reaching as high as 55 percent and peak-day attendance approaching 65 percent. Kastle’s index, while providing a precise metric on office attendance, has a limited scope which covers less than 2 percent of national office inventory, and reportedly omits many of the larger landlords and new, high-quality office assets in the subject markets. The Partnership for New York City released a study recently which found average office utilization levels in Manhattan at 58 percent, as compared to 80 percent in 2019 when accounting for travel, sick days, and remote work – indicating a 72 percent return to pre-pandemic levels. Despite varying methodologies, return-to-office metrics are universally trending upwards during 2023, and with most large employers gravitating around three or more days of in-office requirements, the prospect of most of the white-collar labor force returning to regular attendance in office buildings is becoming more of a certainty. As companies encourage their existing employees to attend the office, they are also pivoting away from fully remote hiring: in July and August, just 9 percent of job postings on LinkedIn were listed as remote, down significantly from over 20 percent of jobs being posted as remote in early 2022.