How the Debate About Return To Office Trends Is Plagued By Questionable Data

What gets measured gets managed. But what if entire offices aren't measured - along with vast swaths of activity like sales calls, business travel and external meetings?

There is a sense that many downtowns are not as busy as they were, but the economy is doing well,  recession risk is receding and unemployment remains very low by historical standards as many businesses struggle to find enough workers. The reality is that traditional measures - from industrial era tangibles vs intangibles and all value the increasingly digital economy has created - no longer capture essential economic activity. JL

Katie Mogg reports in the Wall Street Journal:

Only Silicon Valley’s tech workers go to offices less than Philadelphia at 40% when compared with prepandemic rates (says data) that tracks employee badge swipes in buildings. New York City occupancy has been more than 45% this year, while Dallas and Austin, Texas, office use ranged between 50% and 65%. Smaller offices have the largest return-to-office rates, but they don’t track badge swipes and so are missing from  data. (And) some work outside of the office—including business travel, external meetings, sales calls and other visits where workers interact with colleagues or clients in person— qualify as in-office work days.

The City of Brotherly Love has a new reputation as one of the emptiest office districts in America, sparking a debate over what’s keeping Philadelphia workers at home.

According to one weekly measure, the majority of office workers in and around Philly continue to work remotely much of the time. Only Silicon Valley’s tech workers go to their San Jose, Calif., offices less when compared with prepandemic office-use rates, according to Kastle Systems, a security firm that tracks employee badge swipes in and out of buildings. New York City occupancy has consistently been more than 45% this year, while Dallas and Austin, Texas, office use has ranged between 50% and 65%. 

Kastle’s Back to Work Barometer shows Philadelphia’s office-occupancy rate hovering around 40% in recent months—and under 40% for some weeks of this summer.

Philadelphia, like many U.S. cities, has gone full throttle on efforts to lure people back into downtown areas. But the combination of the office-worker exodus, taxes and crime has resulted in more empty office space on the market today than during the 2008 recession, theorize researchers, Philadelphia employees and real-estate professionals.

Center City District, a business-improvement group aimed at keeping downtown Philadelphia safe and attractive, said its own data set shows office occupancy steadily rising to 57% as of June. The group uses data from street sensors and mobile-phone location pings to monitor foot-traffic in a stretch of downtown with the most office buildings, said Paul Levy, chief executive of Center City District.

Levy wants to see office occupancy in the district reach at least 75% to ensure downtown’s vitality, and bring back jobs for workers in restaurants and other businesses that cater to employees in skyscrapers.

“As an organization, we’ve done everything we can to reactivate,” Levy said. In the fall, the district will hand out free coffee to people as they exit trains in the area.

Smaller boutique office spaces tend to have the largest return-to-office rates, but they don’t use Kastle to track badge swipes and so are missing from its data. This could help explain why occupancy rates seem low, said Les Haggett, a Philadelphia-based first vice president at CBRE, one of the largest commercial real-estate property managers in the U.S.

Kastle said its tally of Philadelphia’s office occupancy is pulled from more than 200 buildings in and around the city and its suburbs, including some as far away as Wilmington, Del.

Also missing from the Kastle data: Comcast, which is based in Philadelphia and is one of the largest private-sector employers in the city. Currently, Comcast mandates three days a week in the office for its 8,000 local employees. One day last week, a tour of the office showed it was quiet amid August summer-vacation season.

The cable company is boosting its in-office requirement to a minimum of four days a week beginning Sept. 12, according to an internal memo from Chief Executive Dave Watson to U.S.-based office workers. Comcast workers in Philadelphia will come in one extra day each week this fall, the company said. 

Watson spelled out that some work outside of the office—including business travel, external meetings, sales calls and other visits where workers interact with colleagues or clients in person—will qualify as in-office work days.

Unlike many major U.S. cities, Philadelphia levies a tax on wages earned there, plus it has alluring far-flung suburbs, which helps explain why many people are staying away, said Mark Zandi, chief economist at financial-intelligence firm Moody’s Analytics and a Philadelphia native. More than 317,000 people moved out of Philadelphia’s urban core between March 2020 and June 2023, according to Moody’s. Philadelphia’s wage tax is 3.75% for employed residents and 3.44% for nonresident workers in the city. Residents who found remote jobs and suburbanites who don’t come into the city to work

Philadelphia Police Department data shows that citywide crime is still up compared with the pre-Covid era. Violent crime so far this year, including homicides, rape, theft and assault, is up 3% compared with the same period in 2019, and property crime including theft and auto break-ins, has risen more than 65% over the same time frame.

Samir Patel, an accountant at a nonprofit in Philadelphia, said he grudgingly takes the train in from the suburb of Bensalem five days a week. Most of his colleagues are remote, he said, but his job requires him to work with physical papers in person. 

“I hate it,” he said.

don’t have to pay.