TheVitality IndexHow decisions around work are creating the next normal for office recovery.

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Office foot traffic by property type

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How decisions around work are creating the next normal for office recovery

The question has lingered for more than two years: Just when will employees return to offices? During the depths of the lockdown and recovery period from mid-2020 through 2021, office visitation was influenced by government regulations, informed by infection rates, shaped by the ways people commute and competitive office labor market conditions, and the need for in-person interaction with colleagues and clients.

Now, traffic is more strongly influenced by new norms of day-to-day work as pressure to return to offices increases and economic conditions face rising headwinds. For their part, CEOs have pointed to employees’ desire to return to cultural destinations and students returning to school when enforcing return-to-office mandates. They have a point: As of the week of October 3, 2022, our Vitality Index shows foot traffic at colleges and universities has returned to pre-COVID normalcy (+3.3%), while foot traffic at museums, stadiums, hotels and other destinations is down just 10.1%.

When it comes to office visitation, the rebound has been more muted. Labor Day this year was regarded by many as a potential turning point in companies’ long-running effort to lure staff back, and average weekday office visitor volumes across major North American cities in the week after Labor Day increased by 8.4% compared with the week preceding Labor Day (excluding Mondays). Yet the climb back to pre-pandemic levels of office occupancy remains steep: North American visitor volumes in the week after Labor Day were 54.9% lower than just before the pandemic.

What seems increasingly clear, however, is that not only has how and where we work changed, but our concept of what an office should be is shifting dramatically. People are increasingly recognizing the value of in-person interactions in promoting collaboration, connections, and a vibrant culture. Much of the corporate conversation today focuses on employee purpose, work-life balance, and serving a multi-generational workforce; in-person collaboration or redesigned office spaces can be an important part of that larger talent strategy. Beyond that, Vitality Index data shows that social downtowns are back. What about the social office? In a recent Microsoft survey, 85% of employees said they would be motivated to go into the office to rebuild team bonds.

“Expectations are definitely shifting,” said Sheila Botting, Avison Young’s President of Professional Services for the Americas. “Our research shows that the office must have a greater purpose beyond traditional environments. Today’s post-pandemic workplace needs to clearly articulate a purpose for the organization—whether that’s collaboration and teaming, professional development, producing work or simply connecting with colleagues. Employees need a compelling reason to return to the office, whether hybrid or full time, and companies are now laser focused on creating dynamic work environments—that are also sustainable and inclusive. We at Avison Young call it the ‘X Factor’ driving the ideal workplace experience.”

A working evolution, not revolution

The balance between working from home and in the office has clearly shifted, at least for now. For example, office visitation is noticeably higher on Tuesdays and Thursdays (47.8% and 47.1% of pre-COVID levels respectively), demonstrating how employees are embracing hybrid and flexible work arrangements.

“Employees want flexibility, and employers want predictability.”
Mark Rose Avison Young Chair
CEO

“Employees want flexibility, and employers want predictability,” said Mark Rose, Avison Young’s Chair and CEO. “What companies are trying to solve for is just what this will eventually look like. How do they empower their employees but maintain and even enhance the best of their culture?”

Flexible office space could be one answer. Foot traffic to flexible office providers has consistently surpassed traffic at other offices, rising 41.0% since the start of 2021 to just 19.2% below pre-pandemic levels. That may point to two things: corporate demand for flexible space is rising as companies continue to assess their workspace needs, and people are finding value in working away from home.

Employers can also incorporate many of the benefits of working from home in their office strategies. Whether it’s providing flexibility on working hours or offering on-site childcare, these solutions can also play a role in supporting diversity, equity and inclusion strategies. The opportunity, then, is to rethink the office not just as an asset but as an important vehicle for company culture. In evolving the notion of the office and how to use it to empower people to connect and achieve balance and purpose, employers may find their workplace and talent strategies are interlinked in important ways.

Trophy buildings at the top

Office foot traffic levels, week following Labor Day 2022 vs. pre-pandemic levels

Still haven't found what they're looking for

Working from home blurred the line between the two places people traditionally spent the most time. Now the lines are blurring between offices and other places people tend to frequent such as cafés, parks, clubs and libraries. Employees seem to be craving a sense of community and organic, rather than forced, interaction, which is why the index shows traffic to cultural events surpassing pre-pandemic levels even as office visitation languishes.

This demand for workplaces that are much more than rows of cubicles is having two primary effects. First, it’s prompting a flight to quality within office spaces: so-called Trophy offices have reached 48.9% of pre-pandemic levels of foot traffic as of the week following Labor Day, while all other offices have reached 42.4% on average.

“It’s not unlike what we saw with residential rents—two years ago, rent demand and costs plummeted, and now we’re seeing a resurgence in demand. That same phenomenon is playing out in the office sector.”
Craig Leibowitz Director of Innovation and Insight Advisory
U.S.

“Trophy buildings are at the top. We’re seeing some really enterprising organizations obtain these high-quality spaces in this moment, seeing the value over the long term,” says Craig Leibowitz, Avison Young’s Director of Innovation and Insight Advisory, U.S. He noted foot traffic at local retailers—a strong indicator of office visitation—is now at 77% of pre-pandemic levels. “It’s not unlike what we saw with residential rents,” Leibowitz said. “Two years ago, rent demand and costs plummeted, and now we’re seeing a resurgence in demand. That same phenomenon is playing out in the office sector.”

Second, the demand for reimagined workplaces is pushing companies and landlords to think differently about how offices are configured and the amenities they offer. Employees’ expectations have changed. That’s where flexible office spaces offer inspiration: many have perks and amenities such as coffee bars, mother’s rooms, fitness centers, outdoor space, pet-friendly areas, bike storage and electric vehicle charging stations.

“The whole world realized you didn’t need to be sitting physically in the office to do your work,” Botting said. “Workers are now saying, ‘Give me the experience, excite me, and I’ll return.’ There’s an opportunity here for companies to be truly innovative.”

Forging human connections

The surge in traffic to cultural events, restaurants and other large gatherings suggests many are craving connections to people and communities after an extended period of pandemic-enforced isolation. With economies now flirting with recession, the need to bond in the face of adversity could intensify—and workplaces can be a great place for that.

The return to normalcy demonstrated by traffic to schools and cultural destinations provides optimism for return-to-office efforts. And that’s critical for more than just offices: figuring out how to make workplaces more attractive and strike a better balance between working from home and in offices is critical to revitalizing downtown areas hard hit by pandemic lockdowns.

“If you’re in a 60-story building, occupancy in that building drives other things we may have previously seen as not directly related,” Leibowitz said. “The coffee shop on the corner has to have foot traffic. And if they’re counting on groups of workers walking to an office to grab a cup of coffee, that speaks to the broader vitality of cities in a lot of respects. Those businesses are contingent upon the fate of office.”

Office foot traffic by asset class

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Key contacts

Craig Leibowitz

    • Director, Innovation and Insight Advisory, U.S.
[email protected]avisonyoung.com

Sheila Botting

    • Principal & President Americas, Professional Services
    • Consulting & Advisory
[email protected]avisonyoung.com

Julian Adams

    • Principal, GIS Practice and Product Lead
    • Global Services
    • Innovation and Insight
[email protected]avisonyoung.com

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