Office towers in Boston remain largely empty this summer, with occupancy rates around 5 percent
The Work From Home experiment is going to last a lot longer than expected for thousands of Boston-area office workers.
When workers fled their offices in March as part of the pandemic shutdown, for many the general thinking was they would be back by early summer. Then, that shifted to the Tuesday after Labor Day.
Now, with the Financial District in Boston still largely a ghost town, an increasing number of companies are telling employees to continue working from home until January, at the earliest. MassMutual, Tufts Health Plan, Blue Cross Blue Shield of Massachusetts, and Wayfair are among the major employers that have pushed back their return dates within the past few weeks. Just those four companies alone represent more than 15,000 workers in the state.
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Blue Cross told employees on Thursday to plan for at least another four months of remote work beyond Labor Day.
“I don’t think we had a high demand from people looking to come back into the space anyway,” said James Linehan, a finance executive at the insurer.
Business leaders such as JD Chesloff, head of the Massachusetts Business Roundtable, cite multiple factors for the delays in returning to the office: While the threat of COVID-19 has dissipated in Massachusetts from the spring, it certainly has not gone away; many people also remain reluctant to ride public transit or hop in an elevator.
Then there’s the continuing question about the reopening of school: Families still don’t know what will happen in the fall, but are bracing for at least some amount of remote learning that will force many parents to continue working from home.
“If the child’s at home, all bets are off,” said Jim Rooney, chief executive of the Greater Boston Chamber of Commerce. “Employers I’m talking to recognize that.”
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Massachusetts school districts are required to submit three plans to state officials by the end of this week: in-class education, one for continuing remote learning, and one plan for a hybrid approach.
At Tufts Health Plan, chief executive officer Tom Croswell told employees of the Watertown-based insurer that the decision to wait until January was based on the latest COVID-19 data from federal and state agencies. “It’s also in recognition that many back-to-school and day care plans are still very much in flux, which is an important consideration for our working parents,” he said.
And, there is this unexpected wild card: Many bosses were surprised by how effective their companies can continue to operate with so many employees working remotely — and by how popular the practice is among workers.
Take the case of Cybereason, which allowed some of its 125 employees back in its headquarters in the John Hancock tower, following a survey that indicated about half wanted to go back. But after a few weeks, Cybereason again shut the office in late July because few people actually came in. Now, the firm will reevaluate its approach in the fall.
“We’ve got a gorgeous office,” said Emmy Linder, the chief operating officer. “It’s a shame to let it sit idle. But in the end, you’re kind of sitting by yourself.”
Governor Charlie Baker’s reopening rules currently allow for offices to be at 50 percent capacity. But few, if any, offices are near that. Tamara Small, chief executive officer at real estate trade group NAIOP Massachusetts, said the occupancy rate for many office towers in downtown Boston is around a paltry 5 percent. In the Boston suburbs, it tends to be higher, but not by much: 15 to 20 percent.
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“The economic impact is significant,” Small said. “Think about all the sandwich shops and dry cleaners and shoemakers, entire businesses that rely on all that office traffic. The longer this trend continues, the more significant the hit will be across the board, not just for commercial real estate.”
Most employers are keeping up their leases for now, but the market is being hit with a wave of available space as companies look to sublease a portion of their corporate offices not currently being used.
Mark Gallagher, vice president at the Massachusetts High Technology Council, said many tech companies are leaving things open-ended, rather than offering tentative dates that keep getting extended. “It’s more, ‘We’re going to let people continue to work from home into the foreseeable future for the maximum extent possible.‘”
Among those is Dell Technologies, the Texas computing company that acquired EMC in 2016 and employs about 9,000 people in Massachusetts. Dell executive Howard Elias said his company’s “return to site strategy” varies around the world, depending in large part on the COVID data points in each location. About 300 workers are commuting to a Dell manufacturing plant in Franklin, but the vast majority of the Massachusetts employees continue to work remotely. On Thursday, Dell expanded a remote-work program allowing employees to work flexibly indefinitely, with a manager’s approval.
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Others, such as ad agency Hill Holliday and software firm LogMeIn, are rethinking the role of their headquarters office, possibly to make it more of a place for collaboration and group projects and less a spot for workers to troop into every day.
Some local companies do expect to take steps back toward normalcy soon. State Street Corp. expects to bring about one-third of its office employees back in the fall, up from fewer than 10 percent right now. But even that group will be split in half to ensure enough social distancing on any given day. For those allowed to come back, attendance will be voluntary.
Chief executive officer Ron O’Hanley said he expects work-from-home will be a much bigger part of the financial services company’s approach after the pandemic finally ends, despite the shortcomings.
“It’s not something that’s ideal forever,” O’Hanley said. “It’s hard to drive rapid innovation. We’ve got to reach a balance.”
Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.
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