As the world reestablishes norms after the dust has settled post-Covid, the pressure to return-to-office is being felt across corporate America. A recent survey from ResumeBuilder found that 9 in 10 companies will have an established return-to-office (RTO) policy by 2025. Large corporations like Dell, Google and Amazon are giving their employees ultimatums in an attempt to get employees back into the office. Data showing that in-office work has any positive effect on productivity is scarce, but when it comes to the effect an RTO push will have on consumer spending and its economic effects, there’s no doubt it will bring changes to how money is distributed across the economic landscape.
A study from BetterUp earlier this year found that in-office workers spend an extra $561 per month on things such as transportation, dining out, additional childcare, and domestic assistance. That amount of money is comparable to a month’s worth of groceries being redistributed to different industries, and there will be far reaching effects across the entire economy.
Benefactors of RTO are certainly anyone in the business of lunch. Attain data shows a steady rise in visit frequency for some chains such as McDonalds and Starbucks, yet interestingly others like SweetGreen and Panera peaked last summer before dipping over the course of 2024. Inflation can’t be ruled out, but it might not be the primary cause given that consumer spending is impressively resilient when it comes to food.
Food delivery services such as Uber Eats and GrubHub exploded during the pandemic, and have only maintained their momentum. Companies are even using lunch delivery as a perk to entice employees, and many historically consumer-driven services are spinning up corporate accounts. Attain data shows a typical Doordash customer used the service an average of 21 times over the last 12 months, spending a total of $600. In addition to lunch, employees returning to the office will also likely rely more on delivery for dinner with less time to cook at home.
Public transit is finally seeing substantial recovery. Ridership of US public transit is back to 77% pre-pandemic levels as of February 2024, according to the American Public Transportation Association. Ride sharing for commuting is also up, as Lyft reported a 17% increase in commute trips in 2023. Gas and auto sales are harder to triangulate against RTO, but gasoline prices are peaking at the same time as RTO, potentially causing more friction for companies trying to bring employees back to the office.
Retail and commercial real estate go hand-in-hand, as in-office work is getting people out of the house and spending more money in-store instead of online. In urban areas, retail locations often share buildings with office space. According to Anthony Melkin, CEO of Empire State Realty Trust, return-to-office in New York City has been a boon for the firm’s retail business, he said in an interview on CNBC. Empire State Realty Trust’s portfolio contains both office and retail space and he credits their positive growth over the last 12 quarters to the return-to-office movement.
People working out of the home are also more likely to spend more frequently on clothes and apparel, though office fashion is likely to never return to pre-Covid standards. In May of 2021, the retail industry saw large gains as people got out of the house, with notable shifts in the type of apparel being purchased, such as athleisure and casual pieces. With people back in the office regularly, often in business districts with retail easily accessible, retail foot traffic will rebound to pre-pandemic levels this quarter, according to a report by CRBE. By 2025, retail foot traffic will surpass pre-Covid levels.
RTO means increased costs for both employees and employers. As previously mentioned, the average employee will incur extra $561 per month of expenses related to RTO. This will consist of commuting costs, such as gas and public transportation, and increased childcare needs and domestic assistance like housekeeping. Other industries that have seen a boost from Covid, like recreation and home improvement will likely see decreases in their earnings as people have less time for recreation and making improvements to their home. When it comes to employer costs, employers save $11,000 per employee who works remotely at least half of the time.
The residential real-estate market could also experience shifts. Employees required to return to the office after moving to more affordable and remote locations could need to relocate closer to the office. This could drive up housing costs in areas closer to city centers. However, there might not be enough critical mass to have a major effect, as companies requiring RTO are seeing employees willing to make sacrifices, such as trading career growth in favor of flexible work.
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