Office vacancies have soared to a 20-year high, showing just how tough it is to get workers to return
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- Office vacancies in London and the US have hit a 20-year high, data shows.
- That presents a challenge to CEOs.
- Many want workers in the office more regularly after the disruption caused by the pandemic.
CEOs may want workers back at their desk, but it seems many offices are staying stubbornly empty.
Data shows that office vacancies soared to a 20-year high in the US and London in the third quarter of the year. The Financial Times reported the news, citing data from CoStar, which provides research on commercial real estate.
The report also said investment in offices "fell sharply" in the three months from July to September compared with the same quarter the previous year in key corporate hubs such as New York.
In San Francisco, vacancy rates hit 20% in the three-month period, the report said, citing preliminary data. The figure was up from 6.3% at the start of the pandemic in 2020.
It suggests a clear drop in interest in office space at a tricky time for the commercial property sector.
CEOs have been busy assessing their office space needs during a period of rising borrowing costs, but have also shown intent to push forward with return-to-office, or RTO, mandates designed to cut back on the remote-working setups introduced during the COVID-19 pandemic and bring workers back to the office more regularly, if not full-time.
In August, it emerged that Goldman Sachs was seeking to enforce a strict five-day in-office policy at a time when CEO David Solomon is coming under growing pressure to address a serious slowdown in dealmaking at the Wall Street bank.
Meanwhile, tech firms such as Meta and Amazon have been busy instituting RTO policies for workers who have been working fewer than three days in the office.
Some employees fear negative performance reviews or contract termination if they fail to comply.
How successful CEOs will be in bringing office occupancy rates closer to pre-pandemic levels remains uncertain.
Last month, it emerged that Meta paid $181 million to end a lease on commercial property at 1 Triton Square in London.
The company, which has dubbed 2023 its "year of efficiency" as part of a big cost-cutting drive, paid around seven years worth of rent to end the lease on which it had another 18 years on. The company never used the building for its own operations.
Many workers are also resisting RTO demands from CEOs by publicly questioning their decisions through what has been dubbed "loud quitting."
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