American workers are returning to the office.

More companies have committed to returning to office culture, leaving behind the remote work policies they adopted during the pandemic. Wall Street Journal reported.

A third of all companies mandated a return to the office five days a week in the third quarter, up from 31% in the second quarter, according to Flex Index, which studies workplace strategies.

That ended a streak over the previous five quarters in which the rate of in-office work had steadily declined as low unemployment gave employees the edge in their quest to work remotely.

Today, white-collar workers have seen declining growth, shifting the balance of power to management.

Amazon called its employees back to the office five days a week. The e-commerce giant is currently in talks to lease additional office space next to its headquarters in the former Lord & Taylor building at 424-434 Fifth Avenue, which houses 2,000 employees.

Dell Technologies also now requires its global sales team to come into the office full time, while 3M has asked senior executives to increase work time at company headquarters and other locations.

No one expects workplaces to fully return to pre-pandemic attendance requirements, and rising office labor rates do not indicate an end to the office market’s challenges . The vacancy rate stabilizes at a near-record level of 13.8 percent, compared to 9.4 percent in the fourth quarter of 2019.

Since the second quarter of 2020, U.S. companies have vacated nearly 209 million square feet of office space, the highest volume ever recorded over a four-and-a-half-year period, according to CoStar data. Much of this vacated space is considered obsolete and may never be occupied by businesses again.

After eight consecutive quarters of reduction in the surface area of ​​companies, the number of occupied offices remained practically stable during the second and third quarters of 2024.

New York is seeing a steady decline in vacancy rates, as financial firms like Citadel, Ares Management and Blue Owl Capital look to expand. AI companies from San Francisco have begun expanding into other markets like Denver, Seattle and Atlanta.

Companies are using office perks, like luxury gyms and gourmet restaurants, to make it easier for workers to return to their desks.

HSBC bank, which in 2022 leased about 200,000 square feet for its U.S. headquarters in Tishman Speyer’s new Manhattan development, The Spiral, added another 35,000 square feet this year after office occupancy increased to 80 percent, up from 40 percent at the time. the old bank office.

Real estate developers are taking note of the change in sentiment.

Earlier this month, Tishman Speyer completed a $3.5 billion refinancing on a renovated Rockefeller Center, the largest issuance ever for a single office asset. The move provided a model for owners of other well-leased office buildings to follow.

Investor interest in distressed properties increases as prices fall; real estate firm Eastdil Secured has completed 18 office sales worth $2.6 billion, led by asset divestiture lenders.

But defaults and other missed payments continue to plague the market. In September, the default rate for office loans converted to securities increased to 8.36%, the highest rate since November 2013, according to data firm Trepp.

Banks, while reporting third-quarter results, say problems with office loans overshadow other types of commercial property struggling with high interest rates as the pandemic ends.

According to CoStar, about 40% of office leases entered into at the start of the pandemic have not yet expired. Once they do, many expect office tenants to offload their space.

“The liquidation is not over,” Phil Mobley, CoStar’s national director of desktop analytics, told the outlet.

— Caroline Handel

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