Return to Office Trends December 2023

The wave of return-to-office mandates effective in 2023 has largely passed and is not expected to return to the same volume of activity as large employers have now predominantly established hybrid attendance policies at a minimum. Nearly half a million employees have been subject to new policies that went into effect in Q4 2023, and roughly the same number were issued new requirements that will go into effect between December and April 2024. In 2023 collectively, technology companies, legal services firms, and government agencies have seen the most significant changes to office attendance policies, but in Q4 of late, the retail sector has driven a meaningful share of changes.

Walgreens Boots Alliance was one of the largest private employers in 2023 to establish a new office attendance policy when in October they announced immediate requirements for executives that would go into effect for all employees in November. In recent weeks, Kroger issued a similar strategy, requiring office-based employees to assemble at least four times per week beginning next year. Evolution among peers and industry competitors may place additional pressure on Target Corporation, one of the largest private employers who is yet to require office attendance but is under considerable pressure from the city of Minneapolis to bring employees back to their headquarters and support downtown foot traffic.

With the continued trickle of new policies and strengthening of some existing policies, less than 1% of Fortune 100 employees are now working at fully remote companies, and average daily requirements have increased 1.5% month-over-month to 2.92 days. A recent KPMG CEO survey indicated that 64% of respondents felt that office attendance would transition back to pre-pandemic norms over the next three years, indicating that average requirements could continue to trend marginally higher as groups strengthen requirements or compliance.

The Placer.AI office attendance index surpassed 65% of 2019 levels in November, the highest measure since the pandemic. The index measures average weekly attendance levels, meaning that attendance rates during the middle of the week when hybrid employees are present trends closer to pre-pandemic levels. While companies remain defensive and many technology or creative firms are testing desk sharing arrangements, this gradual return of the majority of employees on a regular basis may begin to create space pressures for growing companies in the near future. Despite occupied office space in the U.S. declining over 6% since the pandemic began, office-using industries have added nearly 7% to their employee headcounts during that same period, leaving the U.S. with the lowest effective office space per employee on record.