When the coronavirus outbreak first exploded, workers were forced to pack up their desks and do their jobs remotely. Little did we know back then that more than one year later, a lot of people who went remote in March of 2020 would remain remote come April of 2021.
But some workers who have been remote may be in for a near-term change. New York City Mayor Bill de Blasio recently made the decision that on May 3, the city's municipal work staff will begin to report to work in person. And that could impact office buildings all over the city -- and beyond.
Office buildings remain empty
A year-long lack of in-person work has hurt office buildings in New York City. At the end of 2020, the office vacancy rate sat at 15.1%, the highest level on record since 1999.
Not only have offices been empty, but many companies are now reevaluating their needs in light of the past year. Some employers are making plans to reduce the amount of space they lease and bring workers back in a hybrid fashion, where they split their time between remote work and office buildings. Others are dumping their office space altogether. All of this has hurt real estate investment trust (REITs) with a high concentration of office buildings -- particularly those based in New York City.
But now that the city's municipal staff is being called back into the office, other employers may seek to follow suit -- especially since coronavirus vaccine availability has increased substantially since the start of the year, and come late April, all adults will be eligible to schedule a shot.
To be clear, getting vaccinated does not equate to instant immunity. Two of the three vaccines on the market require two doses, delivered three to four weeks apart, and only once recipients surpass the two-week mark from their second dose are they considered fully vaccinated. As such, the push on de Blasio's part to get all municipal workers back to the office by early May is somewhat ambitious given that some employees may still be searching for their initial vaccine dose. Incidentally, New York City's municipal employees will not be required to get a vaccine before returning to the office, but safety measures will be put into place to help protect those who start showing up for work.
An important step for New York City
Mayor de Blasio's mandate may encourage other companies to follow in his footsteps. Not only that, but by returning municipal staff to the office, de Blasio is sending the message that New York City is open for business, and that may encourage more people to visit the city, eat there, shop there, and rent there.
New York City's greater economy has struggled immensely in the wake of the pandemic, and the city needs more bodies on hand to spend money and support local businesses. If more people are asked to return to an office, it won't just be good news for the REITs that own those properties and the investors who have those REITs in their portfolios -- it could also be a lifeline for the city as a whole.