The happy hour toasts and champagne celebrations at the cocktail lounge that Expensify installed in its downtown San Francisco workplace now face a last call: The tech company admits this "experiment" aimed at bringing workers back to the office voluntarily has failed.
Six months after opening its Expensify Lounge, the Portland, Oregon-based software company is shutting it down Wednesday after its free daily cocktails for employees and clients didn't attract people to return to its corporate hub.
In the years following the outbreak of COVID-19 in 2020, employers and office property landlords touted amenities — from gyms, pet and childcare services to yoga spaces and free coffee — as a way to merge workers' home and professional lives and make coming in more palatable. But studies show office use still remains lower than before the pandemic.
The Expensify Lounge, located in the company's office on the 16th floor of the 88 Kearny St. building in downtown San Francisco, initially opened as a sort of "social club mixed with a space where you can be super productive," the company's head of public relations, James Dean, initially said of the space.
Yet even its high-end booze, a specialty cocktail list and branded “E” ice cubes weren't the draw to commute downtown the company sought.
"The Expensify Lounge was a wild experiment," CEO David Barrett wrote in a company blog post. "Granted, we were already a 'remote first' company long before COVID. ... So being forced to work from home wasn't disruptive. It was just boring. But we recognized that we were living through a transformational time for the rest of the market, and decided to fix up one of our offices and run a little experiment around a very simple question: Can anything bring workers back to the office voluntarily?"
The answer, Barrett wrote, was "mostly no."
"We went absolutely all out [and] did everything possible to make the office as attractive as we possibly could," he said of having drinks delivered straight to desks, gigabit [Wi-Fi] and other perks wouldn't find at their homes. "We took this concept further than any company reasonably could at scale, to leave no stone unturned. It was epic, [but] in practice, the lounge was a place that people would generally visit, marvel at, work for a bit and leave, but by no means the only place to work and not the place they want to work every day."
'The Office Is Dead'
Across the country, employers large and small are still trying to figure out how to bring their workers back to an in-office routine that at least somewhat resembles operations prior to the pandemic.
Corporate giants including Goldman Sachs, Disney, Farmers Insurance and Alphabet's Google have ramped up in-person mandates that have been met with stiff resistance among employees uninterested in giving up their flexible schedules. Tech companies, in particular, have abandoned previously lenient policies and in recent months have implemented apps to track office attendance, told employees that in-person time would be used in performance reviews, among other harsher guidelines in an effort to bring workers back to physical spaces.
With an uncertain economy and employer tolerance for remote-work demands waning, companies have clamped down on in-person work requirements that are now viewed as being linked with a company's strong financial performance. Companies such as Meta and social media giant Tik Tok have recently dumped pandemic-era perks such as daily lunch stipends, dry cleaning services or Uber credits to lure workers into the office.
To be clear, many tech companies are holding on to some remote work policies that provide employees with a level of flexibility that didn't exist before the pandemic. And trying to use desk-side booze, a perk that went out of health fashion in many offices decades ago, as an indicator of office allure rather than free lunches or an on-site gym can have its limitations.
Even so, after leading the way as some of the early adopters of remote work, companies are contending with a softer economy, challenges involved in managing a dispersed workforce and the cost of maintaining real estate portfolios that can have significant portions going empty at some points in the work week.
Despite the escalated mandates, office occupancy remains stubbornly stuck below 50 percent of pre-pandemic levels in major metropolitan areas around the country, according to data tracked by Kastle Systems in its office security systems.
What's more, softening demand has pushed the national office vacancy rate up even higher, according to a CoStar analysis. The broad adoption of hybrid work has solidified a lower level of space required by tenants on a per-employee basis, and office vacancy rates have continued to climb through the year to reach a record of more than 13% nationally.
"Anyone going to the office every day is likely going because they feel pressured to (either by their boss or their peers), not because it's actually their preferred place to be," Expensify's Barrett wrote. "Which isn't to say there's no place for offices going forward, far from it. Rather, we're just never going back to a regular 9-5 office culture, a staple of not just our modern culture, but also the foundation of most urban planning."
Expensify leases more than 20,700 square feet for its Kearny Street space, according to CoStar data. The company, which made its remote-first policy a permanent fixture shortly after the pandemic's 2020 outbreak, signed a deal with landlord Nuveen earlier this year on terms that won't expire until April 2034.
The company has five offices around the world, including its Portland headquarters, and plans to stick with its remote-first policy even as others clamp down on increasingly strict back-to-office mandates.
"No amount of begging or coercion is going to work in the long run, [and] the businesses that demand it are fighting a losing war of attrition against an infinite universal energy," Barrett said. "You heard it here folks: The office is dead."