When news of the coronavirus outbreak broke in early 2020, Google (NASDAQ: GOOGL) was one of the first companies to instruct employees to begin working from home. And we all know how things played out from there. In the weeks that followed, numerous companies large and small went a similar route, shifting their staff to remote setups and limiting access to offices.
Fast forward more than a year, and a large number of companies still have the bulk of their staff working remotely. And the fear among office real estate investment trust (REIT) investors is that if employers decide to keep their workers remote on a permanent basis, office buildings will lose out on essential leasing revenue -- and those REITs will plunge in value.
But not every company is planning to retain a remote work setup. In fact, Google is setting specific remote-work guidelines in an effort to get more of its staff back into office buildings as quickly as possible.
Google's policies -- firm but flexible
Google is hoping to reopen offices in limited capacity in April. That effort will hinge largely on how many workers are able to get vaccinated quickly and what COVID-19 cases look like (keeping in mind that the outbreak is, unfortunately, still going strong in some parts of the country).
Google does, for the most part, expect its staff to largely return to the office by fall. But that doesn't mean it won't give employees some leeway. If workers want to do their jobs remotely after September 1 for more than 14 days per year, they'll need to formally apply for such an arrangement. Furthermore, workers can only apply for remote-work allowances in 12-month increments, and that's for exceptional circumstances. For the most part, Google expects those requests to be shorter term in nature. And the company will reserve the right to call workers back to the office at any point in time.
A return to normal?
Now that Google has gone and mapped out a return-to-work policy, more companies are likely to follow suit. And once that happens, office building occupancy could start to quickly pick up.
Of course, some companies may adjust their office space needs in light of the pandemic. The idea of the hybrid work week has been gaining traction, where employees spend a few days each week in an office but also work from home a few days, thereby splitting their time. This arrangement allows employers to save money by downsizing their office space. But even though that scenario isn't ideal for office REIT investors, it's better than the idea of companies dumping their office space altogether.
When will office leasing pick up?
At this stage of the pandemic, many employers may be hesitant to commit to long-term leases. But as vaccine availability increases and more workers are able to get jabbed, we could see an uptick in leasing demand as companies assess their new reality and figure out what does and doesn't work for them. As such, Google's concrete remote-work guidelines are actually good news for office REIT investors, because there's a strong chance that if Google makes a show of bringing staff back to the office, many companies will be quick to follow its lead.