Office occupancy has reached its highest levels since March 2020 over the past month. Driven by high vaccination rates and the return of children to school in major markets, September has recorded an 18-month high of 87% occupancy compared to pre-lockdown levels, according to data from Metrikus. We may still have turbulence ahead but this is certainly starting to look like the return-to-work that we have been waiting for, and our first chance to assess how that return is taking shape after more than a year of speculation. From remote and hybrid working, to monitoring and employee privacy, to all the benefits of smart buildings in the post-COVID era, we can use this foray into new normality to see how the workplace has changed.

“With the shift to hybrid working, conversations over the past year between employee and employer have been dominated by what the office can offer the former that they can’t get at home,” says Raj Krishnamurthy, Freespace CEO. “We always anticipated a sharp increase in the number of offices returning to work post-summer holidays but perhaps not as significant as this in such a short space of time.”

According to Freespace’s office occupancy data from around the world, 38% of offices where freespace sensors are deployed showed their first strong signs of returning to work in September, with an increase of 8% compared to August. Global average office occupancy rates have already increased 3% in September to 22%, the highest rates since March 2020, matching trends in the Metrikus data. By digging a bit deeper into the Freespace data we also begin to see some post-COVID hybrid work patterns taking shape.

The data shows that Friday is the least popular day of the week to visit the office, this was true before the pandemic too but not to the levels we see today. Friday attendance is hovering at around two-thirds of the weekly average, Mondays also fall below the average in Europe and North America, with the three middle days of the week above average. Perhaps unsurprisingly, people are using the new flexibility to ease in and out of their weekends with remote work, which could have wellness implications for improved productivity. Interestingly, Monday and Tuesday were the busiest office days in Asia & Australia, in contrast to Thursday in Europe, at least in this key month in the return to the workplace.

“The beginning of September has produced a dramatic change in town centres, but we also understand that the impact of COVID on offices will be profound and long-lasting. The return to city centre offices isn’t universal, and employees’ readiness to return is influenced by a number of factors,” says Metrikus COO, Michael Grant. “Our intuition is that the forecasters who have been predicting a split in the market are correct, with high-quality buildings in good locations performing well, and assets at the other end of the market coming into trouble.”

As had been discussed by Memoori and others, dumb buildings may be the real losers in a post-COVID world as the benefits of smart buildings shine during the pandemic era. The Metrikus study showed that BREEAM outstanding buildings now command a much more substantial premium in rent over their lower-ranked peers. Anecdotal Metrikus reports from the hottest periods of the summer also suggest that “overheated homeworkers are taking refuge in air-conditioned offices” demonstrating another lure of comfortable workplaces over home offices. From air quality and environmental control, to ease of access and security, to acoustics, design, and furniture, the office is now in competition with the home. 

“Throughout the pandemic our message to employers has been —what are your offices offering workers that they can’t get at home?” says Grant. “Features like indoor air quality, wellbeing and a focused space that caters to different workstyles are the new “must-haves” for successful workplaces and a smart building platform places such actionable insights with a very granular level of detail in the hands for property managers so that they can optimise their spaces.”

Due to hybrid and remote work, as well as the inevitable post-COVID economic downturn, the demand for office space will decrease and the commercial real estate market will shrink. Consolidation will favor those buildings with the ability to track movement and monitor occupant behavior to optimize for social distancing, mask wearing, and general safety, security, and productivity benefits. This is where the COVID-19 disruption meets the long-running privacy debate, testing the determination of businesses, governments, and societies to determine and uphold the rights of workers and the general public.

“We had seen first-hand a number of clients install ‘pilot working labs’. These are areas in the workplace, supported by sensors, which are kitted out as an experimental workspace to anonymously monitor how people are behaving, such as the way they are moving or what work they are doing on a specific day. These labs could be one room, a floor, or an entire building depending on the size of the organization,” said Krishnamurthy. “This has helped them establish how to configure their actual offices to support the results of the experiment and to safely integrate their employees back into the workplace, to which they are clearly doing at increasing rates.”

Workplace privacy will certainly be tested in the coming years but that is the same in almost every “place” in our towns and cities these days, regardless of the pandemic. If privacy levels are maintained then non-privacy invading solutions will arise to fill the same roles, such as the blurred but effective occupancy monitors of Density.io and privacy-at-the-edge approaches. If privacy is relaxed or broken, then it may all end up in catastrophe but we will get a lot more occupant data to improve the physical workplace in the meantime. Either way, and when considering recent occupancy trends, we can be confident that physical offices will maintain a significant role within the emerging flexible and hybrid work model.

Despite the complexity, we are seeing signs of growth. September data from the UK Commercial Tenants Association (CTA), for example, recorded more than 350 new office leases, the highest rate since October 2019 - months before the pandemic. Furthermore, the data indicates that businesses are committing to larger spaces, with the average size of spaces exceeding 5000 sq ft for the first time in 2021. This takes the total square footage of all deals agreed in the UK last month to an impressive 1.7 million sq ft, the largest it has been for almost three years. 

It is still early to predict exactly how the pandemic will change offices and the way we work, not least because the virus is still active and new waves are expected in the coming months, but early results can provide some insight. While it is hard to rule out recession, CRE consolidation, and a turbulent privacy landscape, there are some positive signs to boost our spirits.

“When business crises occur (pandemic-related or otherwise), the companies that emerge stronger are those able to flex their business and people to overcome the new challenges they face. The unpredictability and scale of the COVID-19 pandemic has forced the world to adapt to a new way of working, in some cases practically overnight. Now, more than ever, it is necessary to reimagine work and how it is done,” write Baker McKenzie partners, Stephen Ratcliffe and Julia Wilson, in a World Economic Forum article.

“The pandemic has dominated the news and our thoughts for over a year and changed how people live and work globally,” Ratcliffe and Wilson continue. “Whilst the impact has been devastating in many respects, it has also stimulated positive change in the employment world, refocusing the spotlight on inclusion, diversity and equity issues and propelling businesses forward in embracing flexibility and reinventing the future of work.”