The Office Space Investment Dilemma: Define A Hybrid Work Schedule

Whether you own an office or your commercial real estate (CRE) investment motivation is leading you to buy one, the overriding question affecting future profits remains: Are workers ever going to come back? The answer is: It depends on what version of a hybrid work schedule the companies leasing buildings are using. 

In a Gallup Inc. survey late last year, one-third of hybrid workers reported showing up to the office one day per week, one-third go to work two to three days per week, and one-third are there four days per week. Just 12% reported going to the office five days per week.

Glancing at these numbers bolsters the theory that office space use post-pandemic is a shadow of its pre-pandemic self. 

A Cushman & Wakefield study predicts there will be an estimated 1.1 billion square feet of vacant office space in the U.S. by the end of the decade. The study also forecasts that one-third of space will not be used because of hybrid work schedules. 

Gallup’s poll found that Fridays and Mondays are the least popular days to go to the office. It also found that workers don’t want to work remotely on those days either. 

But not everyone is fighting to stay home.

In a survey of 60,000 Microsoft Corp. employees, the sentiment was remote work caused them to become “more static and siloed” and stunted innovation. 

The Walt Disney Co., another innovation-minded company, began requiring its employees to be in the office at least four days a week, with CEO Bob Iger telling CNBC, “In a creative business like ours, nothing can replace the ability to connect, observe and create with peers that come from being physically together nor the opportunity to grow professionally by learning from leaders and mentors.”

But not all businesses are trying to fight hybrid work schedules by touting a need to innovate. Goldman Sachs CEO David Solomon, who is against remote working, told Fortune the company wanted employees to return to its New York City headquarters five days per week. Period. 

Chris Okada, CEO of New York commercial real estate firm Okada & Co., told Benzinga that it seems as though financial, architectural, legal and accounting companies are bringing people back to work in the city at least three days per week.

“We also have a Twitter office on West 17th Street that houses zero people,” Okada added.
One month after buying Twitter Inc., CEO Elon Musk told his employees that not showing up to the office was the same as resigning. Meanwhile, Musk is still battling the owners of his offices in San Francisco and is behind on his rent. He also closed the company’s Manhattan office.
Remote and hybrid work schedules continue to affect office space investment decisions on top of increased subleasing, interest rates halting refinancing efforts and some buildings being turned back over to lenders. 

Whether employees want Monday and Friday off or work remotely full time is of little consequence if incoming workers are not mentally prepared to do the job. That scenario was addressed in an opinion piece posted by University of Michigan student Mohammed Hasan in The Michigan Daily. 

Hasan noted that teacher-student ratios have also gotten worse because professors have slowly and stubbornly returned to the classroom. He also blamed his Generation Z peer group for being lazy and not receiving enough mental health help post-pandemic.

“We’ve gotten lazier, and maybe it’s not even our fault,” Hasan wrote. “That doesn’t change the fact that we’re worse off for it. When there are so few resources available to help, the task of getting past being ‘lazy’ becomes ever harder. All that we can do now is fight through our laziness or wait for help to come. If we’re treating the pandemic as over, we need to start acting like it.” 

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