Southwest Airlines is aiming to make good on a resolution to strengthen its corporate culture by starting out the new year with a firmer in-office policy that requires many of its workers to commute to a workplace up to five days a week.
Starting Monday, the Dallas-based air carrier will begin requiring its corporate workforce to report to an office either four or five days a week, the company confirmed to CoStar News. The policy marks the latest in a string of recent escalations among large corporations asking their employees to spend more of their time in an office, shifting away from the flexibility they used to allow under earlier pandemic-era policies.
"Corporate campus employees who are hybrid will transition to working onsite Monday through Thursday and Friday as needed," said Lynn Lunsford, Southwest's senior communications adviser. "We are working to enhance employee engagement while ensuring we have a vibrant corporate campus that fosters collaboration and promotes Southwest's culture."
The new policy is a step up from the carrier's previous requirement that asked workers to report to the company's Texas campus at least three days per week.
The company joins a parade of large employers eager to move past hybrid and flexible work schedules they adopted in response to the COVID-19 pandemic. Corporate heavyweights such as Amazon, IBM, Salesforce and Dell, among others, have recently stepped up their in-person requirements, and many employers are now demanding workers commute to an office all five days of the workweek.
Escalated mandates have fueled optimism among national office landlords looking to retain their portfolio occupancy as tenants slashed real estate to both trim costs and adjust to flexible, post-pandemic work policies.
The combination of depressed demand, stagnant leasing and ongoing flexible work has helped push the national office vacancy rate to a record high of about 14%, according to CoStar data. Tenants have collectively handed back roughly 210 million square feet of office space since the start of 2020, with tepid demand expected to prolong any effort to boomerang back to pre-pandemic levels of occupancy.
Cost cutting
That outlook could shift, however, with more companies such as Southwest eager to get employees back to physical space.
In Dallas alone, the company occupies roughly 1.7 million square feet of office space it uses for its corporate hub, according to CoStar data. What's more, the air carrier has made a series of significant investments in expanding its real estate footprint, completing a roughly 425,500-square-foot addition that cost an estimated $67 million in the earlier years of the pandemic.
The company is also facing pressure among activist investors to increase profits and boost its stock price, both of which have fallen sharply since early 2021.
After earlier last year eliminating unprofitable routes and trimming operations, Southwest started offering buyout and early leave offers to some airport workers at outposts across the country. While many of those employees were already reporting on-site full time, the return to office push coincide with the carrier's renewed focus on slashing extraneous expenses and moving forward with a more prudent approach to capital expenditures, strategies for which empty office space does not fit.
Southwest declined to provide details as to how many workers would be impacted by its escalated in-person requirement. The company started 2024 with about 75,000 employees but told analysts it was trying to cut about 2,000 positions before the end of last year.