43%
6%
11%
16%
2020
2021 H1
2021 H2
Indefnitely
Flexibility
23%
Companies Reopening Offices
JULY 2021
Back to Normal Index
As of mid-June
the national
back to normal
index was at
93
indicators of improving U.S. market conditions
7
As of mid-June the national Back-to-Normal Index was at
signs of return to normalcy
What to
Reduction and elimination of restrictions—especially for those who have been vaccinated—matched with warm weather and summer vacation will drive activity up and push more of the country “back to normal.”
expect
Back to Normal IndeX
Nearly half of states (23) were above 95. Only 11 states and Washington, DC were below 90, the lowest at 81.
Back to Normal Index methodology
Source: CNN Business/Moody’s Analytics, accessed July 9, 2021.
1
Indefinitely
A fourth of companies have announced flexible schedules or indefinite access to remote work.
+
As office reopenings continue in earnest during Q3, companies will pilot different remote work policies, hybrid models and office layouts to find the right fit for their culture, business and people.
of organizations that have made public announcements about their return-to-office plans have reopened offices at some capacity.
Two-thirds
Source: Cushman & Wakefield Research Based upon public announcements from 120+ companies.
2
Employee occupancy rates remain low, but companies are setting firmer targets for employees to return on a more regular basis. As of June 2021, a fourth of organizations announced plans to allow employees to choose remote indefinitely (11%) or have implemented flexible policies (16%). This is most common among technology companies (49%) and banking / finance institutions (33%).
For more insight related to reopening offices, access Leading An Active Recovery.
UPTICK IN Office Occupancy
Employee attendance is likely to plateau through the summer and then rise later in Q3 as kids go back to school and companies encourage a return to the office.
Weekly occupancy reaches new highs in June
Weekly occupancy bottomed in February 2021 at
15%
Increase in office usage after initial plummet
Fall 2020 plateau
Holiday dip followed by volatility related to case increases and cold snaps
Steady improvement corresponding with vaccine rollout
Source: Kastle Access Control System Data
3
It doubled to
32%
by the end of June.
rise in NYC subway ridership
NYC Car Commutes Have Recovered, but Public Transit Has a Way to Go
The week of June 14 marked the
FIRST WEEK in 2021
the 2019 AVERAGE.
Source: Metropolitan Transportation Authority
Around
the country
Other markets have similar patterns. In San Francisco, for example, Muni ridership in June was 32% of the same month in 2019 while car traffic is considerably higher (77% of the 2019 level).
4
when NYC traffic congestion was in line with
June 2021
Interest in Office Space Rising
VTS Office Demand Index (VODI):
Increase in Activity: Dec 2020 through May 2021
Los Angeles
Boston
Washington, DC
San Francisco
National
New York City
Chicago
0%
100%
200%
300%
400%
500%
58%
103%
116%
127%
143%
473%
Source: VTS Office Demand Index (VODI), June 2021 Report
As of July 2021, the amount of office space being searched for by companies is up YoY in major markets, including:
Boston +146%
The growth in company searches is leading to increased leasing activity, which was up 15% QoQ in Q2 2021.
Manhattan +27%
San Francisco +19%
Silicon Valley +107%
5
improving market fundamentals
According to the VTS Office Demand Index (VODI), office tour activity has more than doubled in the first half of the year. However, it will take time for that to lead to lease executions and then absorption. Leasing activity has started to recover; look to absorption to begin to improve in the second half of 2021.
Since the pandemic’s start, U.S. office net absorption has been negative, but office-using job growth is improving, adding 389,000 in 2021, and new leasing activity was up
Office-using Employment (Millions, SA)
30.5
31.0
31.5
32.0
32.5
33.0
33.5
30.0
Jun 18
Oct 18
Feb 19
Jun 19
Oct 19
Feb 20
Jun 20
Oct 20
Feb 21
Jun 21
Office-Using Employment
Leasing Activity
Source: Moody’s Analytics, Cushman & Wakefield Research
6
27.9%
YoY in Q2 2021.
Retail Recovery
U.S. retail and restaurant sales ended
Year-over-year
Restaurant Performance Index (RPI)
Source: National Restaurant Association; U.S. Census Bureau; Moody's Analytics Forecasted
Q1 2021 up
Employees returning to the office will increase foot traffic for retail and restaurants in business districts around the country.
Mar 2021
