Major Global Financial Hubs Still Aren't Seeing Employees Returning To The Office

Tyler Durden's Photo
by Tyler Durden
Thursday, Jun 24, 2021 - 04:15 AM

Some of the world's most well known financial centers are still slow to get back to the office, despite the fact that many Covid restrictions globally have been lifted. 

Workplace activity in major cities like New York, London and San Francisco is still about 50% below pre-pandemic levels, according to a new report by Bloomberg. Other cities like Frankfurt and Hong Kong also remain less active than prior to the pandemic, as measured by office space use and use of local transit. 

Businesses are dealing with pressure from employees to transition to a more "work from home" model and the complications of making sure that those who do turn up back to the offices are vaccinated and not spreading the virus at the workplace. 

In Frankfurt, bars and cafes are open again, but "the financial district continues to be eerily deserted, with only the occasional worker entering or leaving one of the city’s many high-rise buildings," the report notes. Mobility data provided by Google for the region suggests activity is down about 17% from prior to the pandemic, despite Frankfurt being one of Europe's busiest hubs. 

Slow vaccine rollouts have made it difficult for life to return back to normal in the German city. 

In London, the city is dealing with the spread of the delta variant, which forced Prime Minister Boris Johnson to postpone reopening of the city until July. This means that banks like Deutsche Bank and Goldman Sachs have had to pause their plans to get staff back to their desks.

It has also dealt yet another blow to the city's restaurants, pubs and retailers.

Traffic in the Square Mile had begun to pick up prior to Johnson's recent announcement, according to location data compiled by Mapbox.

Hong Kong currently has "most workers" back at their desks. The question is whether or not they're going to be able to stay there.

That hinges on whether or not "the government being able to persuade more citizens to take the vaccine," Bloomberg writes. Daily infection numbers have hovered near zero for weeks and office attendance has "nearly" returned to pre-pandemic levels. The city is grappling with a low vaccination rate, the report notes:

Despite being one of the few places in the world where vaccines are available to all adults, the 2.75 million doses administered are only enough to fully vaccinate 18.3% of the population, according to Bloomberg’s Vaccine Tracker—well below Singapore at 28.3% and London at 29.1%.

Vaccine reluctance in Hong Kong reflects a mistrust of the government, as key political freedoms have been eroded following 2019’s unprecedented street protests. The unrest has prompted doubts among companies about the city’s stability as a place to do business. Together with the economic downturn, these concerns have contributed to falling office rents and rising vacancies.

Average daily passenger numbers on major rail routes reached 73% of levels they were at during the same month in 2019. Banks like Goldman Sachs have already re-opened. 

Many people are still working from home in Singapore, in what has become the "default arrangement" for businesses. Singapore locked back down in May after Covid cases spiked to a few dozen a day. 

Office workers that month dropped 23% as a result. Last May, that number dropped 60%. Workers had just started coming back to the office prior to May's lockdown. For example, CapitaLand Integrated Commercial Trust (CICT), recorded 51% of workers back in the office at the time. 

Office vacancy rates show a "slow return" to the office. Rents for the most desirable office space fell for the fifth quarter in a row during the first three months of 2021, the report notes. 

Christine Li, head of research for Asia Pacific at Knight Frank in Singapore, commented: “Most companies want to bring their staff back to the office on a regular basis, but the world has evolved post-Covid. Offices are becoming an intentional destination just like shopping malls, where people don’t go back all the time to get individual tasks done.”

New York is also waking up, albeit slowly. Less than 40% of people are using trains compared to numbers prior to the pandemic. "Most restrictions on business capacity and social distancing were lifted in May," the report notes.

Yet, at the same time, there remains significant vacancies in the city’s commercial real estate market, with supply reaching its highest level in "at least three decades" in the first quarter of 2021. 

In San Francisco, despite more than 80% of the city's population getting vaccinated, more than 9 million square feet of offices are up for sublease in the first quarter. It's the highest amount going back to 2005. 

Only about 19% of office workers in the San Francisco metro area had returned to their offices, according to Kastle Systems. It marks the lowest share of all 10 U.S. cities that the company keeps track of. 

Scott Hazard of Australian software company Atlassian Corp., concluded: “Folks haven’t fully reemerged yet to define their preferences and commuting behaviors and/or office needs.”