In a week when green shoots of hope are breaking out all over the place comes news that for the first time since the lockdowns of the pandemic, Kastle’s weekly 10-city return-to-office barometer has reported an average office occupancy level of more than 50%.
The 10 major US metros in Kastle’s survey—based on entry-card swipes—averaged 50.4% in office occupancy levels for the week ended Jan. 25 (Kastle’s week runs from Wednesday to Wednesday, which is the day the work week most often ends in the emerging patterns of the post-pandemic hybrid workplace).
In another post-pandemic first, all of the metros tracked in the survey achieved office occupancy averages of 40% or above, including the city with the most troubled office sector in the US, San Francisco—which jumped more than two percentage points to nearly 46%.
Austin, which has led a US-leading resurgence in office occupancies among Texas cities, approached 70% in the Jan. 25 survey—and nearly 77% on the day during the week when it notched its highest occupancy level.
According to Kastle, which started to break out daily as well as weekly averages after hybrid work patterns were widely adopted, Tuesday has become the busiest day of the week for office occupancy levels, while everybody tends to disappear on Friday.
Houston, Chicago and New York, which posted weekly averages of 60.3%, 50.6% and 47.5% in the Jan. 25 survey, like Austin also surged on Tuesday, to 66%, 63.7% and 59.5%, respectively.
While it’s probably too early to declare a trend, the upward post-holiday jump in the 10-city average—when compared to the track record of Kastle’s barometer for the past year—is an important milestone.
After creeping up to 43% in March 2022, the 10-city average stalled at that level for the next six months. After Labor Day, the 10-city average bounced up to 47%, but then plateaued at that level for the rest of the year.
Keeping in mind that the 10-city average is an average of an average—in other words, the median level between Friday and Tuesday (let’s call it Wednesday, in a dead heat with Monday as the consensus hardest day of the week for anyone to drag themselves to work)—if a new post-holiday plateau of between 50% and 60% in average occupancy remains steady that will indeed be a hopeful sign for office building owners.
It’s been a busy week for hopeful signs, which taken as a whole appear to be signaling that what was shaping up to be our winter of economic discontent may have a happier ending than many of us expected, around the time the flowers bloom in May.
As the evidence continues to mount that the fever of inflation has finally broken—Tesla and Ford’s new electric Mustang are in a 0-60 drag race to see which brand can lower its prices faster—hope is rising that the Federal Reserve will signal that today’s rate increase will be followed by a pause in rate hikes in May, during which the Fed may decide to take its foot off the fiscal brake.
The White House signaled this week that President Biden will declare an official end to the COVID-19 emergency in May, acknowledging the obvious: that with each new variant—the CDC has stopped giving them names—the bug has gotten more infectious but less virulent.
What we can now say with some assurance is the end of the pandemic was reflected in JLL’s recent annual grocery tracker report, which revealed that in the fourth quarter sales at restaurants filled with people outpaced grocery stores in the US.
Even better, the International Monetary Fund raised its growth outlook for the first time in a year this week, declaring a “turning point” for the global economy: IMF says the threat of a global recession is “diminishing.”
We’ll keep the powder dry on our soft-landing forecaster until we see two critical benchmarks in the coming days: the CPI and the employment numbers.