With the onset of the Omicron variant, many businesses are rethinking their return-to-work plans, and U.S. workers find themselves yet again in ‘The Great Wait.’ Even though many experts believe that Omicron could be a sign that COVID-19 is phasing into a manageable endemic, Omicron is aggressively contagious, more so than any of the previous variants. As this strain propelled a record daily in COVID-19 cases just two days after Christmas, many of the nation’s largest employers are postponing their return-to-office date… again.
The longer that office staff are working remotely, the trickier it will be to return to pre-pandemic norms of office life. Just as it seemed like COVID-19’s grip was beginning to wane, the ‘temporary’ circumstances of remote or hybrid work persisted, causing several big-name companies to abandon or offload portions of their latest leases. However, despite the continued return-to-work delays, some companies are actually expanding their real estate portfolio.
Here are some of the companies that have made announcements that they will not be returning to the office until the situation gets better.
Uber
At the beginning of December, Uber sent out a company-wide memo stating that while they encouraged employees to return to the office, it would not be required until further notice. The ride-hailing juggernaut had already had a bumpy ride into the pandemic. Among a succession of layoffs (the most notable one being when Uber fired 3,500 employees over a Zoom call), Uber shut down 45 of its offices as a result of the virus. The most contentious of its office debacles was the lease at The Old Post Office in Chicago. In August of 2019, Uber had signed a 10-year lease for a 463,000 square-foot building that required $800 million and change for redevelopment. Then 2020 came and the pandemic hit.
Since then, Uber offloaded over 150,000 ft of their new Chicago office in subleases. That’s one-third of its total lease. It prompted Robert Kellman, head of Midwest policy for Uber, to do damage control by saying that Uber’s “commitment to Chicago remains unchanged.” Uber desperately wanted to open its doors and begin operating out of the space by October of 2021.
Now, Uber has postponed reopening those doors for in-person work to January 10, 2022.
Apple
Consumer-electronics giant Apple seems to be bracing for a reality of a permanent remote workforce. After temporarily closing three of its retail stores due to high infection rates, they announced that their return-to-work deadline would be on indefinite hiatus. In a surprising shift to good news, in that same announcement, Apple explained that it would be doling out $1,000 bonuses to each employee. In a letter from CEO Tim Cook, the extra funds were “intended to help employees with their home workspace,” and can be used as each employee saw fit. It seems a bold move to not just ensure company safety, but company retention. The worker advocacy group, Apple Together, staged a walkout on Christmas Eve in protest for better working conditions, paid sick leave, and hazard pay.
However, Apple has been drastically expanding its real estate portfolio in areas where the tech giant is already established, from two additional floors in its Manhattan office in Penn Plaza to an additional 701,000 square feet of office space in its Sunnyvale complex.
Clorox
Clorox, the squeaky-clean global manufacturer of consumer products, has been betting that a return-to-normal may never come. Linda Rendle, the company’s CEO, reasoned that the pandemic’s behavior “was sticky” after watching the continued frenzy for antibacterial wipes and other cleaning products. She has a point, there’s been an undeniable shift in hygienic trends now that people have spent two years hyper-fixating on the onslaught of germs.
Around the same time that Rendle went on record with that observation, it was announced that Clorox signed a 10-year build-to-suit lease agreement with Equus Capital Partners Ltd. Interestingly enough, the 580,000 square foot warehouse space is intended to be a manufacturing facility for its Fresh Step cat litter brand. Considering that pet ownership skyrocketed during the pandemic, the investment isn’t surprising. In any case, the company is planning to present tentative reopening plans to staff sometime in January.
Fidelity Investments
Multinational asset management firm Fidelity Investments has paused return-to-office proceedings at its offices in its headquarter region, specifically in Rhode Island, New Hampshire, Boston, Merrimack, and Smithfield. The halting of its voluntary re-entry program is “due to rising COVID risk scares,” said Michael Alto, a spokesman for the company. For the most part, Fidelity is telling its employees who have not yet been called to work to “sit tight” and continue working from home. “If you were scheduled to start on a future date,” said Fidelity in a company-wide email, “continue to work at home. We will notify you when we restart re-entry, so you may return to the office.”
Fidelity did renew a major lease during the pandemic, and that was its Indian base of operations. The 300,000 square-foot office building in Pinehurst, at the Embassy Golf Links Business Park, was leased for another decade in November of 2020. Back then, COVID numbers had dropped in India, so perhaps Fidelity was feeling optimistic about the future. But, another wave loomed. Then another.
Morgan Stanley
This one may come as a surprise considering that Morgan Stanley’s chief executive James Gorman openly sneered at the idea of allowing employees to continue working remotely back in June. “Make no mistake about it,” Gorman went on record to say, “we do our work inside Morgan Stanley offices, and that’s where we teach, that’s where our interns learn, that’s how we develop people.” But by December, Gorman was singing a different tune. “I was wrong on this. I thought we’d be out of the pandemic past Labor Day and we’re not,” he told CNBC’s Wilfred Frost. As of this month, Morgan Stanley has stated that any non-bank branch employee should plan to work from home on a more regular basis in the coming weeks.
But with all the pageantry of Gorman’s apology, Morgan Stanley continues to expand its real estate portfolio. It was very recently announced that Morgan Stanley would be expanding its operations in Gilbert with a new office lease.
Despite Google’s aggressive stance on their company vaccine mandates, (going so far as to threaten termination of any employee who refuses to get inoculated), the predominant search engine has changed its mind on requiring employees to come back to the office on January 10, 2022. Chris Rackow, Google’s VP of Global Security, wrote in an email that none of Google’s U.S. locations will mandate its proposed three-day-a-week hybrid work schedule and that the company would wait to determine when U.S. offices can once again be “stable, long-term working environments.”
Speaking of stable and long-term working conditions, Google announced back in September of 2021 that it would be spending $2.1 billion on a Manhattan office building. The announcement came a few months after Google spent $7 billion on real estate to house data centers.
Considering how much COVID-19 impacted commercial real estate, the speed at which the economy as a whole recovers could hinge on new leases. For the most part, it looks like the big companies are doubling down on their real estate acquisitions, even if COVID numbers are up. Though some are making concessions about a sustained remote or hybrid work model, the fact that these companies are gobbling up real estate indicates that they may be reluctant to allow remote or hybrid work after the pandemic finally ends.
