Companies Enforcing RTO Are Also Optimizing Offices

The era of rigid return-to-office (RTO) policies is coming to an end as companies and employees settle into more flexible and hybrid work structures, as reported in Bisnow.

The latest push is to optimize existing office spaces, with flexible workspaces, shared areas, and innovative tech that enables scalability to meet the needs of an ever-changing workforce.

Shifting Sands

According to industry leaders, including Mark Weiss, an executive at Cushman & Wakefield, RTO is no longer a relevant concept for most businesses.

While about 80% of companies have implemented some form of RTO policy, attendance levels are often lower than expected, with many firms adjusting strategies to entice workers back into offices.

Despite the shift in policy, companies still maintain hybrid work arrangements. Roughly 75% of organizations are embracing hybrid models, acknowledging long-term office space leases may not be the most efficient use of resources in today’s work environment.

Recovering Foot Traffic

Office foot traffic still lags behind pre-pandemic levels, with national data from Kastle Systems showing office utilization stood at only 53.9% of pre-pandemic activity in late February 2024.

While there has been an uptick compared to 2024, YoY growth in foot traffic has slowed. The lack of a real return to full office occupancy can be attributed to the persistent popularity of hybrid and remote work models.

However, occupancy rates are improving in specific, high-quality office buildings, especially ones with abundant amenities. This “flight-to-quality” trend, where tenants are drawn to the most premium spaces, is becoming more pronounced, particularly in cities like New York, where office towers in prime locations are doing better than they were in 2019.

Focus on Flexibility

As office attendance remains below pre-pandemic levels, companies are prioritizing space optimization. The days of assigning permanent seating to employees are over, and businesses are embracing flexible office layouts, including hotdesking and coworking spaces. 

By moving away from traditional office setups, employers can accommodate hybrid work patterns without significantly increasing their real estate footprint.

Coworking spaces within office buildings are becoming a popular option for companies seeking the flexibility to scale up or down quickly without committing to long-term leases. 

CBRE’s acquisition of coworking firm Industrious, valued at $800M, is one example of how companies are incorporating coworking as part of their broader office strategy.

The New Office Market

Office downsizing has slowed to its lowest point since 2020, as companies find ways to optimize their office space. According to Avison Young, tenants reduced their space by only 2.9% on average during lease renewals in Q4.

The overall office market showed its first quarter of positive absorption since 2021, with leasing activity steadily rising throughout the year. This indicates businesses are moving beyond the uncertainty of the early pandemic years and beginning to stabilize their office footprints.

Growing Dissatisfaction

Despite efforts to modernize office strategies, employee dissatisfaction remains a serious issue. 

McKinsey’s survey found nearly 40% of workers are planning to leave their jobs, a rate consistent with the high turnover seen during the pandemic. Additionally, burnout continues to impact many employees, with 38% of in-person and hybrid workers reporting feeling burned out.

Unhappy employees report their employers fail to foster collaboration, innovation, and mentorship opportunities—key elements for maintaining job satisfaction and long-term retention.

McKinsey’s Brooke Weedle emphasizes workplace changes driven by performance and data are more likely to yield lasting improvements, suggesting employee satisfaction might be more directly impacted by cultural and policy changes.

The Future of Work

The shift from rigid return-to-office policies to flexible, space-optimized work environments represents a permanent change in the office landscape.

As companies continue to embrace hybrid work models, the focus will remain on creating adaptable, efficient, and amenitized office spaces that support employee needs and business goals. 

The future of work will likely be defined by a balance of in-office, remote, and hybrid work, supported by flexible spaces and innovative office designs that promote collaboration and productivity.