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Pandemic-induced office closures may become more permanent

Office Closures
Posted at 3:22 PM, Sep 17, 2021
and last updated 2021-09-20 09:36:33-04

CHICAGO — For many American employees, the pandemic forced them to work from home. For some, it was the first time. That move has raised questions about what the future of the workplace will look like beyond the pandemic.

A year and a half into the outbreak, some businesses were phasing back into in-office work. But the surge of the delta variant has delayed a return to the office for many.

Now, a new survey from the small business review site Digital.com reveals just how much the future of workplaces appears to be changing.

“Seven out of 10 businesses since March of 2020 have closed at least some of their office,” said Dennis Consorte, a small business consultant with Digital.com. “It is an indicator that what's been happening over the last couple of decades is just accelerating, and that is we are moving towards more of a remote workforce.”

What's new now is that much of the change looks like it will be long-lasting.

According to the survey, 69% of businesses say they've permanently closed some or all office spaces. That breaks down to 37% permanent closures of all physical office locations and 32% partial closures.

“This lockdown was a catalyst where businesses said, 'OK, we need to adapt if we want to survive.' And that's what they did,” said Consorte. “Businesses are realizing that they can cut their overhead tremendously by not having all of this office space.”

The closures are differentiated by business size. Those businesses with 10 or fewer employees were more likely to keep all office spaces open, while 45% of businesses with over 500 employees reported closing all of them.

“Cities that historically have had large numbers of inward commuters, often by mass transit those people are, in my view, are not going to return in the numbers that we were accustomed to before the pandemic,” said Steven Davis, a professor of international business and economics at the University of Chicago.

While, reduced overhead, real estate savings and less commuting are wins for companies and their employees, Davis says a permanent transformation will likely be painful for others.

Without the daily foot traffic of in-office employees, shops, cafes and restaurants in city centers will likely take a hit.

“A lot of those businesses will be operating at lower intensity, or not operating at all,” said Davis. “It doesn't mean those spending dollars disappear. They just go to other places in the economy like the suburbs.”

Consorte says it will take innovation to contend with the changes.

“Property owners are going to have to be creative to figure out what to do with this space that is no longer occupied,” he said.

How exactly this balances out, say economists, is still in flux, but one thing is certain: the paradigm shift means office work will look significantly different than it has in the past.