Government officials across the United States, faced with empty downtowns and struggling businesses reliant upon steady foot traffic, are pulling some levers to try to get office workers back to in-person schedules.
A spectrum of local and state officials have rolled out plans to enforce mandates for government employees, with leaders in Pennsylvania, California, Nebraska and Washington, D.C., revoking some pandemic-era policies with the aim to boost their economies.
In Philadelphia, Mayor Cherelle L. Parker said this week that all top city officials would be required to return to a five-day, in-person workweek beginning next month, a plan she hopes will eventually spread to all city employees.
"I want a thriving downtown," Parker said in a statement. "I want to see more people walking in our city, and quite frankly, going in and out of our stores, spending money, helping to strengthen the economy. And quite frankly, when people see more folks walking in our city and you see more bodies, it feels safer."
Throughout various levels of government, leaders are responding to record-high office vacancy rates that have decimated downtown foot traffic levels, caused a string of local business closings and drained city coffers, leading to multimillion-dollar deficits that officials in cities such as San Francisco are struggling to address.
Office attendance across the 10 largest U.S. markets is still about half of what it was prior to the pandemic, according to key-swipe data collected by Kastle Systems. It is even lower in some areas, with rates in Philadelphia, San Francisco, Los Angeles and California's Silicon Valley hovering at about 45%.
The national office vacancy rate, fueled by companies offloading record amounts of sublease space and responding to the effects of remote work, has climbed to nearly 14%, according to CoStar data. Tenants collectively handed back upward of 65 million square feet last year, boosting the total to more than 180 million square feet of move-outs since the start of 2020.
Washington officials and other local business groups have grappled with how to address the area's stagnant economic recovery. This week, city leaders unveiled a more than $400 million plan to boost the district's appeal and, hopefully, attract workers back to the slew of empty office buildings. Known as the "Downtown Action Plan," the initiative builds on efforts put forth last year by Mayor Muriel Bowser and some of the business improvement districts to loosen development restrictions and build more apartments downtown, create new business incentives and enhance public safety programs.
"Today, downtown D.C. finds itself at a post-pandemic inflection point," city officials said in the updated plan. "Once a bustling employment center, downtown D.C. has faced an outflow of office workers in response to remote and telework trends, and it has not added nearly enough visitors and residents to offset the resulting loss of day-to-day activity. Without intervention, underutilized commercial space and decreased activity are poised to fuel a self-reinforcing cycle of declining investment, property values and tax revenues."
Annual tax revenue generation in Washington has already fallen more than $243 million since 2019, according to city estimates, a figure that is projected to fall an additional $193 million over the next five to 10 years if local officials choose not to intervene.
Uphill Battle
Government leaders are testing a fusion of strategies in an effort to combat the empty office towers, even if they face blowback from upset employees and their plans are far from a complete solution.
In California, for example, several state agencies and departments have sent out notices calling employees back to an office at least two days per week. While that's in contrast to the 75% of state workers able to operate remotely in mid-2021, the new mandates are not expected to significantly increase foot traffic downtown.
“I will always be consistent in encouraging workers — state workers, local government workers — at a minimum to mix it up and work downtown at least a few days a week,” Sacramento Mayor Darrell Steinberg previously told the Sacramento Bee.
Even the federal government has made multiple attempts to drag workers back to physical work spaces, but the efforts haven't had a great impact. About 17 of the 24 federal agencies are using 25% or less of the government's total office real estate footprint, according to a mid-2023 report issued by the Government Accountability Office.
Regardless of their intentions, some officials pushing for government employees to spend more time in the office have had to contend with another challenge: workers unwilling to give up their flexible schedules.
A hearing kicked off in Lincoln, Nebraska, this week in which the Nebraska Association of Public Employees, a group representing about 8,000 state workers, is fighting back against an executive order Gov. Jim Pillen issued late last year calling all government employees back to a full workweek in a state office.
“Nebraskans are back to work, and they expect that our agencies are fully staffed and open for business Monday through Friday, 8 a.m. to 5 p.m.,” Pillen said in a previous statement. “As public servants, we have a duty to meet that expectation, and deliver maximum value to the taxpayers.”
Union leaders have argued that ending the remote work policy is a change in working conditions and has to be negotiated. Attorneys for the state have responded by saying that flexible schedules are a privilege, not a right.
The order, set to take effect Jan. 2, 2024, is paused until the court rules on the case.