Return to the Office?

Much was made this week of Elon Musk demanding Tesla workers to either return to the office at least 40 hours per week or resign.

While some companies are increasing the expectations that their workers be in the office more frequently, this isn’t a trend that holds everywhere. Especially in metropolitan areas famous for long commute times.

This week, the Wall Street Journal reported that there was a high correlation between long average commute times and reductions in office occupancy. “Eight of the 10 major cities with the biggest drop in office occupancy during the pandemic had an average one-way commute of more than 30 minutes in 2019. Meanwhile, six of the 10 cities with the smallest drop in office occupancy have average commutes of less than 30 minutes.”

But why are there long commutes in the first place?

First, there are the factors that drove workers to live further away from city centers, including:

• lack of housing, especially affordable housing, close to where the jobs
• seeking out better schools
• desire for more green space
• concerns about urban crime

But we can’t ignore the fact that transportation infrastructure hasn’t kept up with changes in demographics and commuting patterns.

As employees who could work from home during the pandemic did so, they learned that they could do their work just as well from home. Some even moved further away from city centers to get more space for a home office and/or more outdoor space.  While many missed the camaraderie of lunches with co-workers and chats around the coffee pot, they discovered that the absence of a long commute returned time to their day. The daily grind of the commute was more tradition than necessity.

What might come of this?

• More companies may open satellite meeting or work spaces closer to where their employees live.
• If more funding can be provided, transportation infrastructure – from roads to public transit – can be improved to shrink commute times.
• Excess office space can be converted to residential space to allow more workers to live closer to urban work spaces.

These longer-term possible developments would allow the creation of more balanced neighborhoods.

Freedonia analysts will continue to watch these trends to see how remote-work, return-to-work, and urban and suburban office adjustments change not only construction activity, and where service business locate and how they operate, but also how we live in general.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, especially coverage in Construction & Building Products, Consumer Goods markets, and Automotive & Transport industries. Freedonia Custom Research is also available for questions requiring tailored market intelligence.