Office-building landlords are hoping that the massive Covid-19 vaccination campaign launched in the U.S. this month will lead to millions of people returning to workplaces in 2021 after spending most of the pandemic working from home.
But it isn't going to be soon. Rather, a widespread return probably won't take place until the late spring or early summer of 2021 when enough people have been vaccinated in the U.S. for the population to come close to achieving "herd immunity," according to public-health professionals and executives in the real-estate industry.
Moreover, the office world that will be reinhabited next year will look a lot different from the one that was hurriedly vacated in mid-March when the fear of Covid-19 sent much of the U.S. labor force into lockdown. During an initial transition period, office density likely will be low, workers will wear masks and a range of other safety precautions will be followed.
Long-term changes in the workplace will continue for years. Working from home and other remote locations, which became a necessity during the pandemic, will likely remain a major part of the workplace, employers and real-estate executives say.
Businesses that are highly competitive for top talent will likely begin opening small satellite offices in metropolitan areas and offering employees the option of working there, at home or in centralized headquarters -- or a combination of the three. Design firm Gensler already is working with a half dozen Fortune 100 companies on such "hub-and-spoke" strategies, as they are becoming known in the office industry, said Joseph Brancato, co-chairman of the firm.
Many of the hubs and spokes are being designed to encourage informality, he said. "Things are going to be a lot more informal after people have been on their couches or working at their kitchen tables for the last nine months," Mr. Brancato said.
Hundreds of billions of dollars worth of office-building value and mortgages depends on the timing and scale of the return and how that affects office leasing and rents. "All eyes are on the pace of return to office," said a report earlier this month by Evercore ISI.
Office rents could fall as much as 8% next year, according to a forecast by commercial real-estate services firm CBRE Group Inc. That is still not as far as rents fell following the 2008 financial crisis, when they dropped close to 13%, CBRE said.
The return to the office started gathering strength last summer when the infection rate dropped. But it went in reverse during the fall as Covid-19 cases soared.
An average of only 22.9% of workers in 10 cities tracked by Kastle Systems had returned to the office the week of Dec. 16. The highest rate since the pandemic hit last spring was 27.4% in mid-October, said Kastle, a national-security firm that tracks access card swipes.
At least 65% of the U.S. population must be immune for the contagion rate to fall below fewer than 10 new cases per 100,000 a day, which is when a major return to the office is likely to begin, public-health experts say.
By late spring or early summer, about 45% of the U.S. population will likely have received vaccines, according to Ashish Jha, dean of the Brown University School of Public Health. By that time, more than 25% of the U.S. population will have contracted and survived Covid-19, getting immunity that way, he predicted.
"Take 45% vaccinated and 25% infected, and assume some overlap between the two -- we're easily at 55% to 65% immunity," Mr. Jha said.
With tens of thousands of vaccines being issued daily, some companies are beginning to move toward implementing return-to-office plans. For example, in New York, 25 new tenants looking for space entered the office market per week in the first two weeks of December, compared with 20 a week in November, according to data firm VTS.
The December activity is still far below what it would be in a normal year. But the increase was surprising given the holidays and the surge in new Covid-19 cases. "After Thanksgiving, we thought the market was going to shut down," said Ryan Masiello, VTS co-founder and chief strategy officer.
Many of the businesses considering hub-and-spoke strategies have started negotiations with co-working firms like WeWork and Industrious for the spoke locations, industry officials say. Jamie Hodari, chief executive of Industrious, said that one sign of the new trend is the great increase in tenants that are planning deals in numerous buildings rather than just one.
Health considerations, of course, will continue to be the determining factor in the pace of the return. Mother, an advertising agency, is planning to occupy a new 61,000-square-foot space in the Gowanus section of Brooklyn, N.Y., in April.
The nationwide vaccine launch encouraged Mother to believe that date is doable, said Peter Ravailhe, chief executive of Mother's U.S. operation. But the firm is being "practical" about "how unpredictable things are right now," he said in an email. "If April 12 comes along and we still aren't able to safely open our doors, we're not going to rush."