Apple recently set a deadline for corporate employees to return to in-person work. I hadn't realised that Apple, or in fact, so many employees were still working from home full time.
For me, I had always thought we would go back to how we were working prior to the pandemic. Maybe put another way, I just didn't think we would be working from home forever. Having said this, my point of view has changed - flexibility between home and the office has merit as long as it's done thoughtfully. My point of view is not profound, I know. I also believe we are in a very strong job market right now, which enables more sway by employees. I also think that when this job market softens, and we see a recession, the pendulum will swing the other way - more sway by employers and a shift closer to how the world was operating prior to the pandemic. I could be totally wrong here, in fact I can probably manufacture a narrative that argues this theory. And it's for this reason I think no one knows how this plays out down the track.
Here's what office occupancy looks like in the US right now:
Two years following the pandemic, office occupancy is still sitting at less than 40%. This has not been a problem for US corporates though. US corporate earnings jumped 35% in 2021, while workers got an 11% rise, and profits have soared as companies have had their best year since 1950.
Maybe everything else is back to normal? Well, let's take a look. Here's "in-person activities as a % of activities in 2019". Everything seems to be back to normal according to the data - except for the movies, although it could also be seasonal.
Anecdotally I feel like in-person activities are back to normal, certainly in Melbourne. I think eventually we'll see more office occupancy. I also think landlords and developers need to really think about the product they bring to the market in this day and age. I just can't see how landlords would allow for their assets to sit vacant for too long. Landlords are and will continue to reduce rents, repurpose buildings, invest in the amenities and so on. I also believe we'll see a big gap between the demand for demand for A grade buildings and everything else - for now. Give us a good recession, and it'll wash this out too.
My colleague Matt Rigby and I talk more about this in last week's The Wide Lens podcast. I've shared the exact chapter where we discuss this below.
You can also listen to the podcast on Spotify or wherever else you listen to your podcasts.
Comments