What If Executives Pushing RTO Are Actually The Good Guys?

• The conventional RTO stance misses the mark, and hence buy-in from employees, because it’s overlooking the real issues.
• The benefits of coming together, live and in person are quantifiable and palpable — and here’s the important part: those benefits are not for business bottom lines and productivity measurements. 
• C-Suite must offer compelling and honest reasons for RTO that resonate with employees. It’s imperative to address the broader challenges and opportunities affecting people, their communities, and their future.

No one wants to be in the office full-time anymore, but when it comes to making workforce decisions, it’s not that simple. Finding a solution that balances human and business needs is complex. While the C-suite is often villainized for pushing return-to-office (RTO) mandates, what if they’re actually the “good guys” — with the wrong thesis?

The argument that remote and hybrid work harm productivity, collaboration, and culture has been debunked by data. It’s no surprise employees are pushing back — they feel like they’re being sold a bill of goods, and they’re not wrong.

But maybe the conventional RTO stance misses the mark, and hence buy-in from employees, because it’s overlooking the real issues. Nobody is talking about the downsides of hybrid and remote work with any honesty! 

The truth is that these models have fueled a loneliness epidemic, sparked a commercial real estate crisis, and led to lost tax revenue. Add to that the growing homelessness and crime in city “ghost towns,” and it’s clear that more research is needed to explore the true impact of the shift to hybrid and remote work.

The days when workspace decisions were made by just a few executives are long gone. Now, just about every person who works in an office has a say, and their voices are powerful. 

This means the C-Suite must offer compelling and honest reasons for RTO that resonate with employees. At the same time, employees must consider what’s best for their well-being as well as their colleagues and communities where they belong.

It’s time to take a much closer look at both sides of the situation.

The Upsides of Remote and Hybrid Work

Yes, hybrid and remote work is good! Managers report that employees are more productive when working remotely, and employees save time and money — $6,000 to $12,000 annually — by avoiding commuting, with an average of 72 minutes saved daily. Studies also show that remote work fosters trust between employees and managers and benefits the environment.

The demand for remote and hybrid work is very real. According to a U.S. Career Institute survey, 95% of workers want fully remote or hybrid work, with 71% saying it improves their work/life balance. Top talent is leaving jobs that don’t offer hybrid options, and over half of professionals know someone who has quit or plans to quit if forced back into the office.

Many employers are responding to the call. By 2025 up to 36.2 million Americans, a five-fold increase since before the pandemic, will be working remotely. A recent Harvard Business Review trend report revealed that four-day workweeks will move from radical to routine.  

The Crippling Ripple Effects of Remote Work

But, the downside is the crippling ripple effect on commercial real estate, local taxes, and the loneliness crisis resulting from the additional 29 million Americans who are staying home. 

So what if those executives pushing for a return to the office aren’t the villains? What if they’re actually onto something that could help mitigate some of these growing crises?

Commercial Real Estate Crisis

In a recent New York Times article, Matthew Goldstein highlights weak tenant demand post-pandemic as a key factor destabilizing the $2.4 trillion office building sector. As employers are figuring out their hybrid work strategies, cities are seeing soaring office vacancy rates, compounding the challenges to securing financing for buying or developing office spaces.

According to Moody’s Analytics, nearly one-quarter of all U.S. office space will be vacant by 2026, up from 19.8% in Q1 2024. This increase is largely driven by the work-from-home trend, with Moody’s estimating that workers now require only 75.9-80.5% of the office space needed pre-pandemic.

These high vacancy rates are crushing property valuations and putting investors in a pinch. Trepp, a data and research firm, reports that the number of mortgages bundled into commercial real estate bonds that have been foreclosed on or wiped out has nearly doubled this year compared to last. Additionally, Trepp has flagged more than a quarter of the $171 billion in office building mortgages tied to these bonds as being at risk.

Breaking free from the constraints of traditional commercial real estate is challenging. Could hybrid and remote work be the final nail in the coffin for outdated real estate thinking? Maybe. But developing strategies to enhance the traditional office space to meet the needs of every business size and stage is a discussion for another time.

The Impacts of Vanishing Tax Revenue

The ripple effect of reduced activity in city centers due to hybrid and remote work is real. According to Bloomberg, in New York City “property taxes are the biggest source of revenue for the city, delivering about $1 out of every $3 taken in. And, offices account for about one-fifth of that.” 

If demand from big NYC tenants softens, the city will miss the budget. According to a report published by WBU, Boston is already on alert projecting a shortfall of more than $1 billion over the next five years as a result of underutilized office spaces. This trend is occurring in major cities across the nation.

In addition to lost property tax, there is also a shortfall in sales tax as remote employees spend fewer days eating, drinking, and shopping in and around the office. 

As the live and work close-to-home movement continues, spending is being shifted outside of the city center negatively impacting city-based sales tax revenue. The reduced activity in city centers has a ripple effect impacting the overall economic vitality of the area. 

All of these taxes fund things employees need and care about: city services, school districts, social services, lower home property taxes and so much more.

The Human Factor

These are large losses on paper. When we dig deeper into the impact of hybrid and remote work, we find humans at the core. Human connections are lost with hybrid and remote work. 

A future of work thought leader once said, “There is a certain crackle, a spark that happens when people connect live and in person. Innovation is snuffed with virtual meetings.” And, he is right. The engagement that happens in person can not be replicated via Zoom.  

Kyle Waldrep, expanded on that idea, in a recent article in Forbes where he highlights the challenges young professionals face when they miss out on the power of relationship-building and the unique benefits of being physically present for networking, the importance of forging friendships and sharing experiences. He concludes with a compelling reminder: “No one achieves success alone. We all need each other, and we need the workplace of the future — it’s time to embrace both.”

While a lack of “crackle” might not justify a return-to-office policy, the toll on mental health certainly does. According to SHRM, new research highlights that remote and hybrid workers face higher rates of mental health issues. 

A study by the Integrated Benefits Institute found a statistically significant increase in anxiety and depression symptoms among remote and hybrid workers compared to those who work on-site.

The isolation from remote and hybrid work also contributes to loneliness, leading to physical health issues. Unaddressed workspace loneliness can lead to a 26% increase in premature death risk. 

The loneliness pandemic is also costly — absenteeism due to stress and loneliness costs U.S. employers an estimated $154 billion annually, according to the Journal of Organizational Effectiveness: People and Performance.

The Way Forward 

How do you argue against a solution that boosts performance, cuts commute time and costs, builds trust between management and employees, and strengthens ties to home and community? 

You tell the truth. 

The benefits of coming together, live and in person are quantifiable and palpable — and here’s the important part: those benefits are not just for business bottom lines and productivity measurements. That argument simply can’t be the end of the story. 

It’s imperative to address the broader challenges and opportunities affecting people, their communities, and their future. 

You must offer a cross-functional framework that empowers the smart, trusted individuals running the business to collaborate and develop a solution. Ultimately, it’s about finding a balanced approach that works for everyone involved, including the communities in which those people live.