A large number of U.S. employees have been working remotely since the winter of 2020, and for months, companies have been looking forward to a return to the office in some capacity. Apple (NASDAQ: AAPL) was one such company. Initially, the tech giant told its workers to prepare to return to the office in September.
But now, the company is pushing back its reopening plans by at least a month to October at the earliest. The reason? The delta variant.
The delta variant is now the predominant variant of COVID-19 across the U.S., and it's already led to an uptick in cases over the past few weeks. Delta's highly transmissible nature puts the unvaccinated at an even higher risk of infection, and in light of it, some health experts are now cautioning those who are fully vaccinated to start masking up again in crowded, public indoor spots.
The move to delay its return to in-person work is a sensible one on Apple's part in light of the way the coronavirus outbreak has increased in recent weeks. At the same time, it's certainly a blow to real estate investors who are anxiously waiting for an office building recovery.
Could delta spell trouble for office buildings?
In many major markets, including New York City, office building vacancy rates reached all-time highs during the pandemic. In May and June, things were looking more positive for the sector. Coronavirus cases were down, vaccine distribution was going well, and companies were making concrete plans to bring workers back into offices to some degree.
But now that delta is taking over, many companies, like Apple, may opt to delay those plans due to safety concerns. And that could, in turn, hinder office building recoveries and put office REIT (real estate investment trust) investors in a very tough spot.
Of course, there are steps companies can take to make a return to offices safer. For one thing, they can require proof of vaccination for those coming to work in person -- something investment banking giant Morgan Stanley intends to do.
They can also implement rapid COVID testing for office workers as an additional screening measure. But daily COVID testing can get costly, and for some companies, bringing workers back sooner rather than later may not be worth the expense. Instead, those companies may opt to postpone their reopening plans and let workers continue to do their jobs remotely.
As it is, a lot of companies are telling workers that once their offices reopen, they'll get a choice as to whether they want to come in full-time, part-time, or not at all. And so putting reopening plans on hold won't necessarily impede employers from meeting their goals for the year, which is why many are apt to err on the side of caution in the coming weeks.
Apple likely won't be the only company to delay its office plans in light of the course the outbreak has recently taken. But if reopening plans keep getting postponed, office REITs will only continue to struggle.