After the turbulence of recent months, many Londoners will be hoping for a return to normality, albeit under the shadow of a cost-of-living crisis and a looming recession. But is the city’s office economy returning to pre-pandemic patterns of commuting and working, or have we settled into a “new normal” of hybrid working, empty office blocks and diminished city centre businesses?
London’s streets certainly seem busier, and on the days that they are running, so do London’s tube trains. This is borne out by Transport for London data: trip volumes have been increasing since the summer and now average around 80% of pre-pandemic levels. There are some spikes and dips to this trend, (such as Jubilee celebrations and bank holidays elevating usage, and strikes and heat waves reducing it), but Tube use is now just 20% below pre-pandemic levels.
There is a persistent rhythm emerging too. Weekends are still busiest, with nearly 90% of pre-pandemic trips. Monday, Tuesdays and Fridays are quieter with averages of 65-70%, and Wednesdays and Thursdays slightly busier with averages of 70-75%. However, since the beginning of September, the recovery in trip numbers has been particularly sharp around the City of London and Canary Wharf, suggesting that an increasing proportion of passengers are office workers, as opposed to leisure visitors or workers in other sectors.
Other figures confirm the impression of a gradual return to offices. Remit Consulting have been collecting data on office occupancy throughout the pandemic, based on access control systems (swipe cards and so on) from a sample of around 150 large office buildings in the UK. After advice to work from home was lifted at the end of January, office occupancy figures rose quickly to around 25% and stayed at that level throughout the summer, but since the beginning of October have climbed above 30%.
Remit estimate that “normal” office occupancy levels were 60-80 % before the pandemic, so 30% occupancy in fact equates to offices being around “half full” on the average day. Remit also have a more detailed breakdown by London office ‘submarket’ which shows West End offices back to around 42% average occupancy in October, with City and Docklands offices lagging behind.
Further west, in the SW1 corridors of power, offices are busier. When Jacob Rees-Mogg told civil servants to return to their desks in April, there was an immediate, but amusingly short-lived, effect on behaviour. Office occupancy leapt up from a departmental average of less than 50% of capacity, hitting 65% in mid-May, but had fallen back again by the end of that month.
Jubilee celebrations, summer holidays and industrial action kept numbers low over the summer, but occupancy has been back above 65% since the beginning of October. This is not far off pre-pandemic levels – though to be fair there have been an awful lot of ministers to clap in and out of Whitehall offices over the past few weeks.
While the higher levels of civil service return may reflect a tougher line from ministers, it seems that the return to offices has in fact gathered pace just as politicians and newspapers stopped demanding it. But it remains a trickle rather than a surge. Where do we go from here?
Many workers welcomed more flexible working, and are keen to retain its benefits. The survey commissioned by Kings College London this spring as part of their Work/Place project (on which I worked) found London workers embracing hybrid working patterns enthusiastically: 61% reported hybrid working, defined as working from home at least one day a week (compared to less than 20% before the pandemic). A further 13% worked only from home.
Workers expected the changes to stick too: 75% said they were “never going back” to a five-day week in the workplace, with three days a week at home the most popular option. The results of a second phase of the King’s survey (undertaken in the summer) are due to be launched at a joint event with Central London Forward next week, so we will have some idea of whether these views have shifted over time.
But there is a big difference between these workers’ expectations and those of employers. The UK-wide Business Insights and Conditions Survey found that the proportion of employers (weighted by employee numbers) planning to use home-working as a permanent part of their business model rose from 16% in October 2021 to 24% in May 2022. It was much higher in the ‘office-based’ sectors (professional, scientific and technical services, and information and communications) that account for around one in five London jobs.
However, in the latest wave of the survey (August 2022) that proportion appears to have started to fall across the board, suggesting that bosses may be becoming cooler about long-term home-working (a finding which seems to be mirrored in trends tracked by the WFH Project, a consortium of north American universities).
This gap between employer and employee expectations suggests that we have not yet reached equilibrium. Hybrid working certainly poses challenges – both for planned communication within and between organisations, and the “watercooler moments” of serendipity and casual interaction that form the foundations for corporate culture. Mixing digital and real-life interaction is tougher in many ways than the world of universal home-working during the pandemic.
Over time, new ways of working may diminish or overcome these challenges – through enhanced technology, or changes in culture or behaviour. Managers may tighten rules to ensure that teams can meet effectively and to prevent working from home becoming a perk for those with the privilege of controlling their own workflow (at the moment, it is overwhelmingly concentrated in more senior managerial and professional roles), or conversely to prevent a culture of office attendance and preferential treatment for those (mainly male) workers without caring responsibilities.
But as the recession bites, employers may feel emboldened to push for more presence in the office. There are already stories of companies such as Meta (formerly known as Facebook) retreating from the highly permissive approach they took during the pandemic, and some bosses may share Elon Musk’s views about home-working if not his cack-handed approach to employee relations. Even if returning to the office is not mandated, the threat of redundancy may boost presenteeism although, alternatively, tighter economic times may push employers to seek savings on property costs.
There may also be some polarisation: primarily remote working may become the norm in some sectors or companies, while being in the office becomes more established in others. The King’s College research showed that the biggest increase in home-working was among those who were already working from home at least one day a week before the pandemic.
Where more people are in the office, “fear of missing out” – on advancement, on collaboration, on gossip – may draw even more people in. Conversely, where online meeting and collaboration tools are the norm (perhaps augmented by periodic spells of intense in-person collaboration), employees will respond accordingly – not just in their daily habits, but in long-term decisions about where they live.
London’s office economy has not yet returned to its pre-pandemic state, but nor do I think it has settled into a “new normal”. Huge challenges for the real estate sector and the ecosystem of city-serving businesses remain, and some of these will be discussed at the King’s College/CLF event next week. But the future looks less bleak than it did during the pandemic, and any case for stripping back transport seems much weaker than it might have done even a few months ago. The debate about Crossrail 2 even seems to have restarted. Reports of London’s demise look to have been premature at best.
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