the remote work
desaster
Hong Kong to San Francisco: How office workers are returning across the globe
Hybrid working: Khan must do more to get workers back to the city centre, says new report
London’s mayor Sadiq Khan must do more to encourage workers back into the office in order to avoid a productivity slump and “unintended economic impact,” says a new report today.
The report – authored by the Centre for Cities think tank – urged the government and mayor of London to reduce cost-barriers for commuters using public transport, and “work with businesses” to increase the minimum number of days workers are expected in the office.
Its research, which analysed TfL weekday tube exit data and surveyed 558 office workers, suggests that office attendance rebounded strongly to 70 per cent of February 2020 levels by the end of 2022, but has since plateaued, risking a dip in productivity.
According to the survey, the average worker in London currently spent less than two and a half days in the office per week in April 2023, around half of all working hours spent in the workplace prior to the pandemic.
Andrew Carter, chief executive of Centre for Cities, said: “Lifting Covid-19 restrictions on its own has not been enough to bring some workers back. Policy makers should be wary that we don’t passively let a public health emergency turn into a longer-term negative impact on the economy.”
Carter added: “Home working has delivered many immediate benefits for workers in knowledge-based industries, such as reduced commuting and more flexibility. But these immediate benefits must be balanced with the potential longer-term costs of lower levels of creativity and less on-the-job learning, particularly for younger workers who do an unofficial apprenticeship through learning from their older colleagues.”
The report urges the mayor to “protect existing services on the public transport network, so as not to lengthen commuting times” – as well as to consider a “temporary scrapping of peak fares on a Friday.”
It adds that “long-term investment decisions” for public transport infrastructure should not be avoided based on current assumptions about lower demand, which may not last.
The findings coincide with the introduction of a new timetable on London’s busiest commuter route, the Elizabeth Line, marking the completion of the Crossrail project.
Recent research conducted by workspace operator IWG found that since the lines opening in 2023, businesses along its route have seen a surge in the number of workers heading into the office.
Kate Hart, chief executive of the business collective EC BID, said “it is vital for the future of London and the wider UK economy that we address challenges that hybrid working poses to creativity, knowledge sharing, and on-the-job learning.”
“The report is a timely reminder for both the private and public sector to work collaboratively to enhance the experience of being in the city, foster innovation and ensure the sustained growth of the capital.”
“I am pleased to see the strong recovery in office attendance across London, defying predictions of remote work becoming the new normal.”
A spokesperson from the Mayor’s office said “there is no doubt that commuter habits have changed fundamentally since the pandemic with more people working at home.”
“The Mayor also understands how worried Londoners are about rising inflation, costs and making ends meet. Sadiq was proud to freeze TfL fares for five years, saving Londoners hundreds of pounds each year and helping to encourage more people onto our public transport network.”
The spokesperson added that the “strict conditions set by the Government in the emergency funding agreement for TfL following the pandemic mean we have been left with no alternative but to match the Government’s fare rise on national rail services.”
Hong Kong to San Francisco: How office workers are returning across the globe
The rise of hybrid working and working from home during the pandemic has left cities across the world facing up to new challenges – but the rate at which staff are returning to their offices is different across the world.
Asian cities, despite more strident restrictions on mobility during the pandemic itself, have seen their office desks fill up at speed.
US cities, however, continue to lag – with San Francisco’s struggle to attract tech workers back to the office well covered, with serious knock-on effects for the city itself.
In London, the ‘tw*t’ has become part of everyday lexicon for those who turn up at the office Tuesday through Thursday, with Fridays now almost universally viewed as a work from home day.
But how do global cities compare?
JLL’s research into the future of the central business district, released today, gives an insight into the different speed at which staff are returning to the office.
London lags European neighbours
According to the JLL research, London’s ‘re-entry’ rate is still 35 per cent down on pre-pandemic levels; the biggest gap in any of the major European cities it studied.
Paris and Amsterdam, for instance, sit at just a 15 per cent gap.
But even London is way ahead of even the most ‘returning’ US cities, with Houston down 39 per cent and New York down a whopping 54 per cent.
The lack of office workers has had a knock-on effect across the world’s cities, with businesses serving those commuters – from pubs to sandwich shops to train companies – feeling the pain.
Just this week campaigners at Centre for Cities said Mayor Sadiq Khan should do more to encourage workers back to the office to avoid a productivity slump and an “unintended economic impact.”
Changing the city for the future
JLL say global cities are at an “inflection point, navigating structual changes to how people live and work due to the pandemic.”
The New York listed commercial real estate company though believes that changing as little as 10 per cent of older, less popular central city office space into residential units could tackle housing affordability challenges as well as bring mixed-use vitality to quieter, previously commercial-only areas.
“After three years of dramatic shifts to how we live and work within CBDs, significant opportunity exists to reimagine how we use and interact with city centers,” said Phil Ryan, Director of Global Research, City Futures at JLL.
OpenAI CEO Sam Altman says the remote work ‘experiment’ was a mistake—and ‘it’s over’
OpenAI CEO Sam Altman isn’t averse to change—he helped kickstart the current A.I. race with chatbot ChatGPT, after all, threatening to upend multiple industries—but he still thinks startups are most effective when employees work together in an office.
The idea of fully remote work becoming the norm has come and gone, he said this week at a fireside chat in San Francisco organized by the fintech company Stripe.
"I think definitely one of the tech industry's worst mistakes in a long time was that everybody could go full remote forever, and startups didn't need to be together in person and, you know, there was going to be no loss of creativity,” he told attendees. "I would say that the experiment on that is over, and the technology is not yet good enough that people can be full remote forever, particularly on startups."
He isn’t alone in his assessment. Many CEOs have been demanding that remote employees spend more time in the office, among them Bob Iger at Disney, Howard Schultz at Starbucks, and Robert Thomson at News Corp. During the pandemic, remote work or a hybrid work schedule was the only option for many office workers—and many grew to prefer it to being in the office every workday.
“I do not believe in remote work for startups,” Keith Rabois, a general partner at venture capital firm Founders Fund, told The Logan Bartlett Show last week, adding that neither he nor his firm would invest in a venture based on it. Younger workers, he noted, “learn by osmosis” in a way that requires in-person interaction, and supervisors discover hidden talent by watching them.
Meanwhile at the struggling Uber rival Lyft, new CEO David Risher ordered remote workers back to the office last week one day after laying off more than 1,000 employees, or about 26% of the workforce. Employees will now have to come in Mondays, Wednesdays, and Thursdays, with Tuesdays recommended.
Many remote workers contend that working from home is just fine, and they are not eager to return to pre-pandemic office and commuting routines. In a Pew Research survey released last month, 56% of respondents said working from home helps them get work done and meet deadlines, while 37% said it neither helps nor hurts.
But at least one CEO, James Clarke of digital marketing firm Clearlink, worries employees might be secretly working multiple jobs while working remotely. He also worries some might be freeing up time by using A.I. tools like OpenAI’s ChatGPT and GPT-4—time that his company isn’t utilizing.
Altman said, "I feel pretty strongly that startups need a lot of in-person time, and the more fragile and nuanced and uncertain a set of ideas are, the more time you need together in person."
He knows a thing or two about that. As he and fellow OpenAI cofounder Greg Brockman told the Possible podcast this week, they spent months trying to figure out what exactly their A.I. chatbots should be, ultimately deciding against specializing in one field, such as law or medicine, and going instead for the broadest possible audience—and letting that audience decide for itself how to use the technology.
That strategy has proven so successful that OpenAI is now valued at nearly $30 billion despite being founded just seven years ago. And CEOs everywhere are looking to capitalize on the productivity gains made possible by tools like ChatGPT and GPT-4.
IBM CEO Arvind Krishna said this week his company will pause hiring for roles it thinks could be replaced with artificial intelligence in the coming years. He also said while you might be just as productive working from home, “your career does suffer” if you work remotely.
This story was originally featured on Fortune.com
The $500 billion ‘Office real estate apocalypse’: Researchers find remote work’s effect even worse than expected
The pandemic spurred work-from-home era is decimating the office sector, with rising vacancy rates and declining property values. And a set of researchers that previously estimated the effect of remote work on office property values, have revised their assessment, seemingly suggesting things are worse off than they thought.
In a paper published last year, researchers from New York University and Columbia University estimated a 28% decline in New York City office values by 2029, totaling to a $49 billion loss. And in their model, that equates to a $500 billion “value destruction,” nationwide. The researchers—Arpit Gupta, Vrinda Mittal, and Stijn Van Nieuwerburgh—revised their estimate this month in the latest version of their paper, titled: “Work From Home and the Office Real Estate Apocalypse.” They now see a 44% decline in New York City office values by 2029, and a nationwide value destruction, as they put it, of $506 billion in just a three-year period from 2019 to 2022.
The reason behind their revised, yet bleaker assessment?
In their paper, the authors argue that remote work has led to significant drops in lease revenue, occupancy, lease renewal rates, and market rents in the office sector within commercial real estate. All of which has affected cash flow, at a time when the Federal Reserve has aggressively raised interest rates. Although, interestingly enough, they found that lower quality office properties were more susceptible to the shocks listed above, and were at a greater risk of becoming a “stranded asset,” they wrote. Still there is an underlying uncertainty in their model, which they note, the future of remote work.
In studying lease level data for more than 100 office markets in the U.S., the authors found an 18.51% decrease in lease revenue between December 2019 and December 2020, just months following the start of the pandemic. The quantity of newly signed leases by square footage and rents of newly signed leases also fell in that same period. All the while, vacancy rates in several major markets are at record-highs, the authors wrote, pointing to New York City, which has an office vacancy rate of more than 20% as of the first quarter of this year. Additionally, the authors said they’ve found a “direct connection” between companies’ remote work policies and reductions in their actual leased office space.
“The key takeaway from our analysis is that remote work is shaping up to massively disrupt the value of commercial office real estate in the short and medium term,” the authors wrote.
Still, the effects are not uniform across the country or across properties. The authors found that higher quality buildings, a.k.a. buildings with higher rents that were built more recently, “appear to be faring better,” which they claim is consistent with the notion that companies have to improve office quality for workers to want to come back. Additionally, they found that cities with greater work from home exposure are seeing larger declines in office demand, which is clearly shown in these two examples. In looking at San Francisco and Charlotte, they found the former’s office sector experienced greater declines, which is to be expected as San Francisco's office properties have been hit particularly hard with the shift to remote work. Still, both markets did see declines in their office valuations.
“We calculate a reduction in value of the office stock between the end of 2019 and 2022 of $69.6 billion for NYC, $32.7 billion for San Francisco, and $5.1 billion for Charlotte,” authors wrote. “For the remaining office markets, we combine market-specific lease revenue declines with valuation ratio changes for NYC to compute the value decline. Nationwide, we find a $506.3 billion decline in office values in the three-year period.”
The greatest declines in property values by dollar losses over that three-year period were seen in New York City, San Francisco, Los Angeles, San Jose, and Boston—which the authors say could affect local governments that rely heavily on property taxes, triggering an “urban doom loop.”
This story was originally featured on Fortune.com
Is remote work worse for wellbeing than people think?
Remote work is consistently touted as the best way for workers to feel mentally and physically well. But the reality is more complicated.
When Cat, 30, was offered a fully remote role last year, she didn’t think twice about accepting. By then, Cat, who lives in London and works in environmental services, had already been working mostly remotely for some time as a result of the pandemic. She thought that being based from home wouldn’t be much of a problem.
But during the past few months, Cat has started to have second thoughts.
“Working alone all day every day, particularly when my partner is in the office, is tough,” says Cat. “Sometimes, I won’t see anyone all day, which can be very lonely. I’ve found that instead of taking breaks to chat to people in my office, I pick up my phone. All of the extra screen time has definitely had a negative impact on my wellbeing.”
Remote work has been heralded as a solution to some of the problems of our fast-paced, pre-pandemic lifestyles. For many, it’s meant the opportunity to spend more time with their children, or use time that they would have previously wasted commuting pursuing more fulfilling hobbies. But new research into remote work and wellbeing has shown mixed results – in Microsoft’s 2022 New Future of Work Report, researchers found that although remote work can improve job satisfaction, it can also lead to employees feeling “socially isolated, guilty and trying to overcompensate”.
The negative effects have come as a surprise for some employees, who are now feeling the crush, realising remote work isn’t necessarily the wellness panacea it has been touted as. Contrary to the running narrative of a mass demand for remote work, some employees are actually choosing to switch into roles with an in-office component.
But for many, these downsides are well worth it. For demographics who struggled with an office-based working life pre-pandemic, the problems that working from home bring are a small price to pay.
A ‘rapidly growing mental health crisis’
Working from home might have once been viewed as a utopia of exercise on our breaks, making healthy homecooked lunches and easily being able to make the school run. For many, however, the reality has looked very different.
From research showing that remote workers are putting in longer hours at their desk, to data suggesting that up to 80% of UK workers feel that working from home has negatively impacted their mental health, an increasingly complicated picture is emerging when it comes to the wellbeing of home-workers.
Many people can feel isolated during remote work, but child-free millennials are particularly likely to be affected
Nicola Hemmings is a workplace scientist at mental healthcare provider Koa Health. She says that the lack of human connection that Cat has struggled with is a common complaint. She points out that the pandemic sparked a “rapidly growing mental health crisis”, and that even those who have fully embraced a move to remote work might not be exempt.
“When working remotely, we miss out on the social cues of a busy office and much needed social-interactions – catching up in the corridor, or making a drink in the kitchen while checking in and asking about the weekend,” she says. “These seemingly small moments can collectively have a large impact on our wellbeing.”
Isolation isn’t the only problem remote work presents. Cat says that on top of feeling lonely, she has also found that dealing with a high volume of video calls has made her feel “self-conscious”, and that constantly seeing her own face on a screen has left her wishing that she could return to in-person meetings. “I’d prefer to have the option of an office a few times a week so that I have some human connection,” she says.
Additionally, workers in some specific groups are feeling negative effects harder. Cat is a child-free millennial, a demographic that are very likely to be affected by the struggles she describes.
One survey showed 81% of under-35s feared loneliness from long-term home working, and studies have showed heightened levels of stress and anxiety among younger workers since the shift to remote work. Hemmings says that specific circumstances more often associated with younger millennial and Gen Z workers – such as having recently entered the workforce or not having a quiet, dedicated workspace – can have a severe impact on wellbeing.
A fair trade-off
For some, however, working remotely during the pandemic has been enough of a positive gamechanger to supersede the downsides.
Remote work likely affecting our ability to learn, focus and innovate, studies show
Dr. Talia Varley holds a Master of Public Health from Harvard University and MD from McMaster University. She is the physician lead for Advisory Services at Cleveland Clinic Canada, a medical centre where physicians, wellness experts and management consultants help organizations improve employee health and manage organizational risk.
As doctors and business advisers, we are seeing more academic and real-life evidence that office models – whether remote, hybrid or in-person – correlate with employees’ cognitive health, a key component of overall brain health that describes the ability to clearly think, learn, problem-solve and remember. All are essential components of performing everyday workplace activities.
Although hybrid, remote and ‘telecommuting’ work arrangements have been studied for decades, the widespread acceptance and implementation of remote work since the beginning of the pandemic has turbocharged research in this area andadded to our knowledge base.
Today, there is a growing body of research that, when stitched together, is cause for concern. For companies that want to maintain strong hybrid and remote work options, these studies raise issues that should be addressed to help maintain team engagement and employees’ cognitive health.
Prior to the pandemic, researchers concluded that the loneliness and isolation that can accompany remote work can have a detrimental effect on cognitive health in the long-term. In 2020, a Microsoft study found that remote collaboration is more mentally challenging than in-person collaboration. Specifically, brainwave patterns associated with stress and overwork – which can both lead to cognitive decline – were significantly higher when collaborating remotely rather than in person.
Additionally, fully remote and hybrid work have shown association with increased likelihood of symptoms for anxiety and depression compared to in-person work. And the video calls, text messages, social media and other communication tools that should logically alleviate loneliness and enhance collaboration can actually cause exhaustion and stress, which have been associated with reduced creativity and depression. Depression can further change our ability to think, and impair attention, memory, information processing and decision-making skills.
There’s more. Last year, Dutch researchers found a statistically significant decrease in cognitive performance when a chess player competes online versus offline, face-to-face. A Memorial University study, based on a preliminary review of data, revealed individuals experienced a meaningful memory deficit and recalled fewer instructional details when receiving information provided through a telehealth system compared to the same information provided in person.
Meanwhile, McKinsey & Co. released a 25,000-person survey last summer that revealed fully remote and hybrid workers suffered considerably more physical and mental health issues, which can impact cognitive health.
While certain recent research paints hybrid and remote work more positively, citing benefits such as better life balance and improved well-being, the overall data that I see still slants negative for cognitive health as a whole.
This is all happening at a time when deeper cognitive skills and more innovation, creativity and problem-solving are expected to play a proportionately larger role in performing white-collar jobs. In my role advising Canadian corporations, I hear C-suite concerns around the potential impact of remote work on employee anxiety, isolation, burnout and – in tandem – cognitive health.
These concerns are not misplaced: We know cognitive engagement is often enhanced in in-person environments that host teams on-site, but still offer places for individual work and uninterrupted thinking.
So how can companies support their remote workers and maintain cognitive health for remote and hybrid workers? It starts with the basics: regular breaks, physical activity and positive stimulating ‘mind games’ such as hobbies and crosswords. It also includes healthier and more active lifestyle decisions, strong social connections and better sleep habits. Moving is critical to maintaining cognitive health.
Research from Harvard University shows that moderate walking of just 20–30 minutes a day can slow cognitive decline, boost memory and thinking, and is even associated with reduced risk of depression and anxiety. It is imperative that companies pro-actively offer mental and physical health care supports that lead to better cognitive health, are tailored to remote and hybrid settings and ensure employees know these services are available.
In addition, support can include a temporary or gradual return to the workplace, where employees can both see and feel benefits such as greater purpose and more opportunity to experience cognitive ‘wins’ (for example, creative in-person working sessions, productivity increases and enhanced mood linked to better performance).
It is important to note that some cognitive health gains are also likely to evolve over time as workers adapt to new models. The chess study mentioned earlier noted that the cognitive performance gap of remote versus in-person players decreased over time, suggesting that some adaptation to a newly remote work setting is likely.
Why Remote Work May Be Hurting Young Workers
A new study found a serious drawback to remote flexibility.
In the chaos and lockdowns of Covid-19, companies shifted to remote work out of necessity. Three years on, some are maintaining the status-quo while others -- including Apple, Amazon and Google -- are shifting to hybrid or fully in-office mandates.
And though workers tend to love the flexibility of remote work, there may be some significant drawbacks to it.
A new working paper from economists at the Federal Reserve Bank of New York, Harvard and the University of Iowa found that, while remote work led to a notable increase in productivity, it also led to a crucial decrease in feedback. This situation most impacts younger workers.
The study, titled “The Power of Proximity to Coworkers,” only examined software engineers at a single Fortune 500 company, making the scope narrow. The implications of it, however, may be wide-reaching.
Engineers who worked in the same building as their peers received 23% more feedback than geographically distant teammates when offices were open; when they were closed, that number shrank by 17%. And though being in person reduced productivity in programs written per month by 21%, it increased feedback and collaboration, supporting the idea of a longer-term investment in a stronger team.
“We find a now-versus-later trade-off associated with remote work,” Emma Harrington, an economist at the University of Iowa, told the New York Times. “Particularly for junior engineers who are new to this particular firm, and younger engineers, they receive less feedback from their senior colleagues when they’re remote.”
Even in a hybrid situation, the study found that younger workers still pay the price.
“One worker’s choice to work remotely impacts her peers. Older workers are much more likely to work remotely than young workers. Their not coming back to the office can depress younger workers’ skill accumulation,” the study reads. “This may be particularly important as young workers learn the most on the job.”
The study, though its findings are specific to that one firm within that one industry, found that there is something irreplaceably important about the human proximity found in an office.
WHY REMOTE WORK COULD LEAD TO LESS INNOVATION
Looking at two hypothetical companies, the researchers extrapolated that if one-half of employees at each business work from home, their meetings of all types—serendipitous and planned—would fall 35% and patent citations between the companies would decline almost 12%.
“We think this means information exchange between firms is decreasing,” Prof. Chen says. “It is worrying. These businesses co-locate for a reason. If they can’t learn from each other, we think that is a big deal.”
“Presumably,” he adds, “an even bigger effect is the harm that it does to serendipity and flow of information and innovation within the firm.”
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