CBAI Q124 The Remote Work Revolution: 5 Considerations

The Remote Work Revolution: 5 Considerations

NAREIT reported its annual numbers and the office REITs again were among the worst performers.

Since early 2020, the COVID-19 pandemic has dramatically reshaped the landscape of work and the office properties market.

Remote work arrangements will continue to have an impact on office properties values.

I looked through the research papers to understand the data behind the remote work trends.

So far, the evidence is sparse and sometimes contradictory but general findings are as follows:

1) Remote work – what the numbers say

1. 69% of college workers working in tradable goods industries have jobs that can be done remotely, while only 19% of non-college workers in non-tradable industries can work mostly or fully from home,

2. The expected average in-person days remains constant at 2.4, or slightly less than half of the workweek,

3. The survey conducted in the end of 2022 in Manhattan found a continuous decline of fully-remote employees from 28% to 16% y/y. The gains came from more workers coming to the office 1, 2, or 3 days per week. But only 9% of office workers were in the office five days a week. In all, 49% of workers were in the office on a typical day,

5. More employees of smaller firms (fewer than 500 employees) have returned to the office on an average workday (54%) than of large firms (more than 5,000 employees, 44%),

7. For workers who are able to work from home, hybrid work dominates with a 45% share and a further 20% of workers are fully remote. These fractions have been stable since November 2021.

2) A Case For Remote Work

The positive correlation between remote work and employee satisfaction/performance can be attributed to various factors, including enhanced work-life balance, decreased commuting time, and increased work autonomy.

  • The self-reported productivity gains are strongly positively correlated with the numbers of days worked from home,
  • People report being very satisfied with their remote work experience, being willing to give up about 5% of pay for the ability to work remotely 2-3 days per week, and being likely to look for other work should the remote work benefit be removed,
  • The shift to more remote work increases productivity and income for the high-skilled that can telecommute.

3) A Case Against Remote Work

Several micro studies did not find gains in productivity from remote work in specific settings.

  • Most employees consider themselves less productive at home, but that productivity increases as employees become more familiar with remote work technology,
  • There are short-run increases in productivity. Longer term, teams become more “siloed” and exhibit less synchronous communication,
  • Feelings of isolation and the inability to obtain feedback as a result of remote work decrease productivity,
  • Working from home significantly decreases employee happiness and elevates stress levels due to increased work-related fatigue, blurred boundaries between work and personal life, and increased sedentary behavior,
  • The effect of remote work on well-being varies by parental status and gender. Parents and females are more likely to be affected by working at home.

4) CEOs’ Viewpoint And Corporate Culture Issues

Numerous company top managers argue that working from home reduces employee productivity and hurts firm performance and values.

  • Many CEOs have argued that remote work makes it harder for firms to establish and maintain corporate culture,
  • Remote work may make it harder for new/young employees to receive mentorship, develop professional norms, and absorb corporate culture,
  • A loss of corporate culture or employee mentoring may make recruiting talented employees harder,
  • Team-building, brainstorming sessions, group meetings need to be coordinated. This requires removing employee flexibility on when to come into work and demands in-office presence,
  • Return-to-office mandates led to employee resentment and disillusionment,
  • Glassdoor reviews show significant declines in employees’ ratings of overall job satisfaction, work-life balance, senior management and corporate culture after a firm announced a return to office mandate. Those companies that insisted on an early return to the office have reported low employee morale, a decline in their hiring rates, and a loss of top talent,
  • Many CEOs expressed regret over their return-to-office mandates. Nearly a quarter of managers in S&P 500 companies surveyed acknowledge that they made return-to-office decisions primarily based on intuition rather than facts.

5) Company-Level Outcomes

All else equal, if remote work boosted worker productivity then this should show up in firm profits.

Analyzing S&P 500 firms, the survey results suggest that firm performance and firm values did not significantly improve as predicted by managers.

Contrary to the belief that such mandates enhance firm value, they lead to a significant decline in employee job satisfaction without a notable improvement in firm performance, challenging the justification for the return-to-office policy in the post-Covid era.

The study finds that the probability of return-to-office mandates is higher for firms with poor prior stock market performance. The return-to-office mandates are often used by managers to regain control and blame employees for poor performance.

However, institutional ownership significantly decreases the probability of remote work, and CEO stock ownership does not have a significant effect on remote work mandates.

The probability of return-to-office mandates is significantly higher for firms with male and powerful CEOs, who are more likely to grab power back from employees through return-to-office.

Anecdotal evidence suggests that many employees believe that managers lack trust in employees and worry about losing their control over employees who work remotely from home rather than physically in the office.

Initiatives to mitigate the effects of remote work revolution

Policy decisions
Forcing government and private workers back to the office is a policy response, but its effectiveness may be limited given the scale of the challenge, with potential trade-offs between interests of urban office centers and suburban telecommute locations.

Office-To-Apartments Conversions
YardiMatrix + RentCafe are reporting that this year over 55,300 housing units are being converted from office buildings, a more than fourfold increase since 2021.

Washington, D.C. leads with plans for 5,820 converted apartment units, followed by New York with 5,215 units, including a significant project at 25 Water Street in Manhattan — previously a JPMorgan & Chase Co. outpost — into 1,263 apartments, the country’s largest project of its kind.

Dallas ranks third, with 3,163 housing units from office conversions, representing the highest share among top cities.

Subsidies for Return-to-Office
Subsidies for returning to the office could be effective, either directed to landlords for office improvements or amenities, or directly to tenants.

Tenants might use subsidies for in-office benefits, such as free meals, or to offset employees’ commuting costs.

The elasticity of work-from-home days may be low if commuting time is the primary friction, if employees’ work location choices do not respond to incentives such as free meals, suggesting policies to improve commuting time could be more effective.

Takeaways For Leaders

  • All productivity growth comes from industries where remote work is feasible,
  • Highly educated, high‐wage employees, long‐distance commuters, and those who work in the information and communications industry exhibit smaller reductions in productivity,
  • College-educated workers in tradable sectors are about 12.5% more productive working from home than on-site, and non-college, non-tradable workers are about 2.5% less productive working remotely than on-site,
  • Individual factors, such as family-work conflicts, social isolation, and a distracting environment, were reported to decrease employee productivity, while self-autonomy and self-leadership were reported as contributors to increased productivity,
  • Return to office mandates hurt employee satisfaction but do not improve firm performance,
  • The expected average in-office days stabilized at 2.4, or slightly less than half of the workweek.


About the author: 

Olga Koroleva is a founder and CEO of Capital Brain, a company that builds AI-powered products. She is also a high-altitude mountaineer who likes to climb mountains with double-digit death rates, University lecturer, and a public speaker on leadership and risk taking. Sign up to her self-leadership newsletter at