While U.S. offices are half empty three years into the Covid-19 pandemic, workplaces in Europe and Asia are bustling again.
Americans have embraced remote work and turned their backs on offices with greater regularity than their counterparts overseas. U.S. office occupancy stands at 40% to 60% of prepandemic levels, varying within that range by month and by city. That compares with a 70%-to-90% rate in Europe and the Middle East, according to
a property-services firm that manages 4.6 billion square feet of real estate globally.
Return to office was even more common in Asia, JLL said, where rates ranged from 80% to 110%—meaning that in some cities more people are in the office nowadays than before the pandemic.
Bigger homes, longer commutes and a tighter labor market help explain why Americans spend less time in the office than Europeans and Asians, workplace consultants say.
This divergence in return-to-office habits not only benefits overseas landlords more than their U.S. peers. It has a direct impact on how quickly metro areas rebound from the pandemic’s economic shock. Cities in Europe and Asia have bounced back relatively well. But empty office buildings and missing commuters have undermined recoveries in U.S. cities such as New York and San Francisco, where local restaurants, shops and other businesses that rely on office workers as their primary customers have suffered.
The number of unemployed in New York City increased by 83,500 between early 2020 and the third quarter of 2022 as the city’s unemployment rate surged far above the national average, according to a report by the New School Center for New York City Affairs. Many of those who lost their jobs worked in Manhattan in face-to-face industries such as retail, accommodation and food services.
While Manhattan has been particularly hard hit because of its dependence on office commuters, other U.S. central business districts are also struggling. Falling office values are threatening to hit city budgets that depend on property taxes. Lower transit ridership is weighing on the finances of public-transportation authorities. Adding more apartments can help revitalize central business districts, but that will take time.
Several overseas capitals experienced periods where more than 75% of their workers were back at their desks in 2021 and 2022, JLL said. That includes Tokyo, Seoul and Singapore in Asia. Paris regularly topped the list of workers back in the office in Europe. Stockholm wasn’t far behind with several months at a more-than-75% return-to-office rate.
No major U.S. city tracked by JLL achieved that high a return rate during the period.
“The U.S. has borne the brunt of this,” said
director of city futures at JLL.
Living arrangements are one reason for the difference in work habits. Americans are more likely to live in spacious suburban houses. That makes it easier to set up a home office away from distractions. Hong Kong’s small apartments, for example, often house multiple generations, making working from home less appealing.
Suburban sprawl means many Americans have longer, more tedious commutes plagued by worsening traffic jams—another reason to stay home. While a number of European cities also have long average commutes, New York and Chicago are unmatched, according to mobility-services company Moovit Inc. Public-transit systems in Europe and Asia are often more reliable and less prone to delays, making it easier to get to work.
“We have high-density cities with effective public-transport systems,” said
London-based director of workplace experience at consulting firm KKS Savills. “That makes a difference.”
Another explanation for America’s office exceptionalism is its labor market. At 3.4%, the U.S. unemployment rate is barely more than half the European Union’s unemployment rate of 6.1%. While Europe is also facing labor shortages, U.S. companies have been particularly hard hit, said JLL’s Mr. Ryan.
That has forced them to look farther afield for employees and hire remotely. Tech firms, which account for a particularly high share of employment in some big U.S. cities, have long been more tolerant of remote work.
Co-working companies are also reporting lower occupancy in some U.S. cities.
said 72% of its desks in New York were leased as of the fourth quarter of 2022, compared with 80% in Paris, 81% in London and 82% in Singapore.
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Workplace consultants say they expect the office-use gap between the U.S. and the rest of the world to persist.
It doesn’t help that U.S. offices were emptier long before the pandemic. A construction glut led to high vacancy rates, and even within leased offices companies tended to put fewer people on each floor than their European and Asian peers.
All that empty space is now creating a negative reinforcing cycle, said
an associate partner at business consulting company McKinsey & Co. Americans sitting in big, mostly empty offices find the experience depressing, making them more likely to stay at home in the first place. “It feels less energetic,” he said.
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