Before the coronavirus outbreak began, remote work was an option largely reserved for the self-employed and those privileged enough to work for companies with flexible staffing models. But these days, remote work has practically become the norm in the corporate world.
Many major companies have yet to welcome staff back to the office and have had employees working remotely since February or March of 2020. And while some big names had intended to reopen their offices in the fall, those plans have largely been pushed back due to the delta variant and the surge in COVID-19 cases it's caused.
Of course, the longer the remote work trend drags on, the more worried investors in office buildings are apt to get. Office building vacancies have skyrocketed across major U.S. markets, and until it's safer to bring workers back in, office REITs (real estate investment trusts) are likely to remain sluggish.
But it's not just safety issues that are preventing offices from reopening. There's also employee pushback to consider.
At this point, U.S. workers have gotten used to doing their jobs remotely, and many don't want that setup to change. In fact, the share of online job searches for remote work opportunities rose 460% between June 2019 and June 2021, according to job site Glassdoor. That uptick was seen across a wide range of industries. And it may have office REIT investors worried.
Is remote work here to stay?
Many financial giants, including Morgan Stanley, have adamantly stated that remote work is still, in fact, just a passing phase. But the longer employees stay remote, the more difficult it will be to get them back to offices at full force.
These days, a large number of companies that plan to call workers back to the office are looking at hybrid models, where employees spend a few days each week working in person and also work a few days from home. Of course, hybrid work arrangements are better for office REITs than completely remote ones. But the hybrid model easily affords companies the opportunity to downsize their square footage, and that's a hit office buildings can't afford right now.
One aspect that might reassure office REIT investors is that the coronavirus pandemic is still raging, and so the uptick in remote job searches could be coming from a place of fear among employees. Once things improve in that regard, the number of people seeking remote options could decline, especially since working from home isn't ideal for everyone.
Furthermore, President Biden recently imposed a mandate for companies with 100 or more employees to require coronavirus vaccines or implement weekly COVID-19 testing. That mandate could actually make for a safer return to office buildings -- and help more people get back to in-person work more quickly.
Still, right now, it's a tough time to have money in office REITs. And until we start seeing workers return to office buildings in droves, we can bet that a lot of investors will continue to lose sleep.