As remote work persists, cities struggle to adapt

Lily Stateline coverage of the economic effects of the COVID-19 pandemic.

Andrew Challenger’s urban neighborhood in Chicago is buzzing, but no office workers.

“I live a 15-minute walk from my office building, and every restaurant, bar, gym, and store is 100% full,” Challenger said recently. “When I arrive in my building, it is still practically empty. Much of normal life has returned, but not that.

Challenger, senior vice president of Challenger, Gray and Christmas Inc., an executive coaching and outplacement company, said company surveys show that people want the extra time and flexibility of remote working, and companies facing labor shortages aren’t able to turn them down.

“HR [human resources] teams are so overwhelmed with recruiting. They need to put workers in place, and if they need to offer remote work, they will,” Challenger said. “Companies keep coming up with plans to get back to the office and then they keep backing off those plans. People will just stop and go somewhere else if they do that.

Nationally, people were working remotely about 39% of the time in April, after peaking at around 62% in mid-2020 at the height of the coronavirus pandemic-related shutdowns, according to a national survey conducted by the University of Chicago and three other universities.

New realities will likely force cities and states to shift their focus away from mass transit and the dense housing that surrounds it, to promoting shared workspaces, broadband availability, and more competitive tax rates as they fight for workers who can live anywhere.

States and smaller cities are also likely to respond with new zoning policies, which Chicago-Kent College law professor Stephanie Stern calls “untransit.” in a paper published in April by the Stanford Law and Policy Review.

Instead of focusing on building dense housing near commuter transportation, as cities have done recently, many will focus on broadband access and larger housing, Stern writes. They should also plan remote public work sites, she writes, citing studies showing that remote workers want the social interaction and break from home distractions that such centers can provide.

“Remote work is poised to transform land use law by detaching labor from centralized workplaces and blurring the lines between work and home,” Stern writes.

There are variations in working from home across states, however, according to the University of Chicago survey. The rate was below 25% in states with fewer white-collar workers like New Hampshire, Iowa, South Dakota and Wyoming.

But workers are staying home more than 45% of the time in California, Colorado, Delaware, Illinois, Oregon and Vermont. Authors of the survey on working conditions and attitudes provided Stateline with detailed data to make state breakdowns.

Most companies expect workers to be away about 30% of the time after the pandemic, although the national rate has been “stuck” at around 40% since last fall, economist José María Barrero said. head of the investigation at the Instituto Tecnológico Autónomo de México. in Mexico City, one of universities that have collaborated with the University of Chicago.

The percentage of people working from home in major cities like Chicago is higher than the national average. Ten of the largest metropolitan areas have workers who still spend about 57% of their workdays outside of the office as of May 11, according to building access card swipe data from Castle systemsranging from 41% in Austin to 66% in San Jose, Silicon Valley, California.

Downtown businesses are affected as workers spend less money near jobs. Typically, a single worker spends up to $15,000 a year on food, shopping and entertainment near work in New York City, or $12,000 in Alaska and California, according to the Working Conditions Survey. .

The shift to remote working is also driving down the value of commercial properties, reducing property tax revenues for cities. “Cities are doing their best to get people back into the office” to combat revenue losses, said Lucy Dadayan, senior research associate at the Urban-Brookings Tax Policy Center.

In New York alone, the market value of office buildings fell $28.6 billion in 2022, resulting in the first drop in assessed values ​​in more than 20 years and causing more than half of the city’s $1.7 billion drop in property tax revenue from the previous year.

Apple’s headquarters in the San Jose area was one of the places that pulled out of a back-to-office plan under pressure from employees. Apple postponed several times his plans to bring employees back three days a week. The company cited outbreaks of COVID-19, but employee resistance was also a factor.

“Working in the office is a technology of the last century”, say Apple employees written in an open letter signed by 1,445 current and former employees. “Coming to the office, without having to be there, is a huge waste of time. … Many of us spend several hours every day commuting to and from the office, only to find ourselves in an environment where we can do our jobs less well or be on a video call anyway.

Apple’s office rules for now remain at two days a week, allowing employees to spend 60% of their time working from home, which a group of workers protested online as flexibility “still far from sufficient”.

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The shift in Silicon Valley’s office work culture has been shocking, said Christian D. Malesic, president of the Silicon Valley Central Chamber of Commerce.

“These were places that said, ‘You never have to leave our campus to do personal business.’ It was their business model. They have foosball tables and Slurpee machines and dentist appointments,” Malesic said. Traffic in the area is much lighter now and plans to expand tech campuses are on hold, hurting local construction companies, he added.

Austin, the big city with the most office work according to map swipe data, has a lot in common with Silicon Valley on the surface: It’s a drive-through area with liberal politics and a booming tech sector. boom.

But many new businesses in the region appreciate working in the office. Austin and other cities in Texas saw influxes of new people from California, New York and other coastal states, and some may be looking for work in “adjacent technology” jobs such as sales and marketing that require more face-to-face interaction, or in legal and finance companies that are increasingly reminiscent of near-full-time office workers.

Over the past year, companies such as Charles Schwab, MOCA Financial, Peak6 and Shop LLC have added hundreds of thousands of square feet of office space to the Austin area, said House spokesperson Bryce Bencivengo. of Commerce of Austin. Even tech companies such as Facebook, TikTok and Amazon have more than a million square feet of office space in the area, he said.

Law firms are also well ahead of others when it comes to returning to offices. Card reading data shows rates of work from home for the legal sector to 25% nationally and as low as 19% in Chicago as of May 5.

As working from home encourages more office workers to live in small towns, service workers in big cities could lose their jobs if their employers depend on office workers traveling to city centers, according to a Princeton University study published in March.

To combat economic damage, city centers may need to attract more employers who typically require employees to show up in person, such as energy, construction and transportation companies, the study found.

Town centers that emptied out at night as commuters left for their suburban homes could end up attracting more full-time residents, who could support an array of businesses, the study concluded. If cities create a high quality of life for residents, he said, “big consumer-rich cities like New York will likely continue to thrive.”

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