Organizations’ back-to-office plans are being put on pause as businesses hesitate in pursuing a post-Covid return because of a surge in cases caused by the Delta variant, threatening a recovery in the U.S. commercial real-estate market.
According to The New York Times, the U.S. is averaging 124,000 new Covid-19 cases every day, the highest level since February and more than double that of two weeks ago. The vast majority of people infected with Covid-19 aren’t vaccinated, health officials said. Hospitals in infection hotspots say they are operating at or near capacity.
The U.S. office market had shown signs of a recovery this spring after vaccination efforts began in earnest in January, curbing the surge in Covid cases and prompting optimism businesses would bring remote staff back to in-person work.
Gross leasing activity in the U.S. office market climbed 28.7 percent in the second quarter to 34.7 million square feet, the first time that it surpassed 30 million square feet since the onset of the pandemic, according to JLL research.
But with the resurgence of the coronavirus, companies across the country including Google, Facebook and Salesforce.com are delaying bringing back workers to their offices.
“They were planning to start around September, and they’re looking at three to six months later now,” said Phil Mobley, director of U.S. occupier research at Avison Young, a commercial real-estate-services firm. “They’re delaying, but they’re not ultimately changing their plan for the long term — the ones that have a plan for the long term.”
Julie Whelan, global head of occupier research at CBRE, another commercial real-estate-services group, urges companies to take a wait-and-see approach to get employees to return to the office because experts say the Delta variant is as transmissible as chickenpox.
“The surge in the virus is relatively recent, so it will be critical to watch the rate of hospitalization over the coming weeks,” Whelan said in a statement. “If hospitalizations remain low, we may see return-to-office plans resume to a greater extent.”
Some companies make vaccination mandatory
Some companies are mandating that employees get Covid-19 vaccinations — mainly front-line positions in such sectors as transportation, retail and health care — to stop the spread of the variant.
United Airlines Chief Executive Scott Kirby recently announced that the carrier’s 67,000 employees had until October to get vaccinated or risk termination.
Walmart, the world’s largest retailer, has ordered all corporate employees and managers to be vaccinated by October. The company has doubled the cash incentive to $150 for store and warehouse workers to get vaccinated.
More than 1,000 hospital systems require workers to protect themselves against Covid-19, according to Kaiser Health News (KHN).
“More follow suit every day as hospital leaders aim to head off staff shortages like those experienced last year and to keep employees from becoming vectors of the disease,” KHN said.
U.S. government encouraging shots
President Joe Biden has ordered all civilian federal workers to get the shot or abide by strict safety protocols, including mask-wearing and frequent Covid testing.
With a workforce of more than 2.1 million civilian workers, 3.7 million contractors and 570,000 U.S. Postal Service employees, Uncle Sam is the country’s largest employer.
The Pentagon, which has 1.3 million active-duty personnel, recently announced that all people entering its facilities would have to wear a mask, regardless of their vaccination status.
“Even these health and safety protocols may not give some employees enough comfort in coming back to the office,” Whelan said. “Given breakthrough cases and unvaccinated children under the age of 12, there remains hesitancy in the eyes of employees to risk bringing the virus home to their more vulnerable family members.”
‘Keep options open’
Still, as Avison Young’s Phil Mobley points out, the delayed re-openings do not necessarily indicate that businesses are having second thoughts about pursuing a hybrid staffing system, with workers dividing their time between home and office.
“When we talk to our clients, about half of them have told us that ‘we’re just trying to execute a safe return to [the] office, and then we will worry about our long-term strategy,’” said Mobley, who advises office tenants. “The net effect of this is it’s going to push the recovery of the [office] market further out because there’s going to be more time for short-term deals as renewals come up during these next three to six months.”
According to an article in The Harvard Business Review (HBR), companies need to continue to proceed cautiously as officials grapple with the Delta variant before deciding when to welcome employees back to the office.
“It is not uncommon for managers to fall into the trap of ‘symbolic plans’ for dealing with a crisis — plans that look good on paper but are useless when you actually try to implement them,” the HBR authors said. “When the future is unpredictable — as it continues to be thanks to the pandemic — it makes sense to keep options open.”