Reviving urban economies by returning to the office: The case of the nation’s capital

Returning to the office is a key to recovering from the pandemic. This is especially so in urban areas, where downtown life — known as central business districts (CBDs) — are cultural and economic hubs. There are three “losers” of hybrid work: public transportation, food service and CBDs. These represent the backbone of urban landscapes.   

Office occupancy is well below pre-pandemic levels worldwide. For example, New York City is 52 percent below, London 42 percent, Singapore 21 percent, and Frankfurt 20 percent.   

But, get this: The Washington Post reports that less than 25 percent of Washington, D.C. employees have returned to the office. The nation’s capital, brimming with museums and clubs and tip-top restaurants and 24 million visitors from around the world each year, has only one in four people back in the office? That is not sustainable.    

The D.C. metropolitan region is returning to the office more slowly than other international urban areas. Despite the unpredictable nature of COVID-19, local officials are pressing for safe reentry to office buildings, hoping these employees will resuscitate stagnating economic sectors such as retail and hospitality. 

After working remotely from kitchen tables and basement playrooms for 20 months, migrating back to the office represents a significant lifestyle shift. Employees no longer connect work and office, and that poses a challenge for employers. A recent COVID-19 Snapshot survey of Washington, Baltimore and Richmond metro employers found that pandemic-shy workers and fears about variants have delayed the return to CBDs. 

Employers predict the return will be slower than anticipated. Respondents expect 68 percent of employees will be in the office by summer 2022. Thirty-eight percent of employers believe the number of employees teleworking will decrease while about half expect it will remain the same. 

The need to bring hundreds of thousands of workers back to downtown D.C. is critical to fuel the city’s unprecedented growth over the past two decades. Commuters have been a vital component in the nation’s capital, which sees its net daily population grow by 78 percent — the highest among U.S. cities, according to the Census Bureau.   

D.C. Mayor Muriel Bowser phased in a full return to the office for municipal employees on July 12, 2021. It was part of her three-stage process to bring city employees back. The move demonstrated her commitment to deploy city employees to help revive the business community and D.C.’s economy. 

Like other urban areas, opening D.C. offices will depend on elements that have professional, personal, institutional, and economic consequences. “The need to balance employee flexibility and organizational productivity has led companies to explore hybrid work models, which enable employees to work from the office or virtually. Their approach involves rethinking how, when and where we work,” according to “The Next Normal,” a guide from CBRE, the commercial real estate services and investment firm.

As the largest employer in the area, the federal government drives workforce policies in the region. Each government agency submitted plans for reentry in summer 2021, ranging from full return to telework to a combination. Some have committed to reopening more swiftly than others. 

“The federal government’s nationwide operating status remains at ‘Open with maximum telework flexibilities to all current telework eligible employees, pursuant to direction from agency heads.’ Further changes to the Government’s operating status, consistent with the most recent guidance and principles set forth by the [Centers for Disease Control and Prevention], will continue to be communicated to agencies by the Safer Federal Workforce Task Force,” according to a White House memo to agency and department heads.   

The flexibility displayed by the federal government leaves local businesses wondering how to reinvigorate when the largest employer hasn’t returned. Energizing D.C.’s CBD depends on an influx of office workers. Food trucks, bars and restaurants, street retail, sporting events, and just plain liveliness depend on their presence. Commuters spend, on average, about $127 a week each in the city. And that translates into jobs, retail profits, and tax revenue, each of which experienced a shattering drop during 2020.

Last spring, a local business group, the Federal City Council (FC2), asked private employers to pledge to come back to the office sooner rather than later. “Many of the small businesses your workers used to patronize may not survive unless that foot traffic eventually returns,” wrote Anthony Williams, former mayor and FC2 president and CEO.  

How hard is it for employers to commit to a certain date? Capital One Financial, the McLean, Va.-based financial company, which is one of the largest employers in the region, delayed its plans for employees returning to office work for the third time this year, until sometime in 2022. The World Bank is expected to have 50 percent of its D.C. staff in person at its headquarters beginning in January, as has the International Monetary Fund. But both dates are floating.     

Some District employers are seeing workers come back to work. The District’s 14 hospitals and health systems required all employees and clinical team members — an estimated 30,000 people — to return to the workplace. Higher education appears to be back in full force. Two of the larger employers in the District, Georgetown University and George Washington University, had their staffs and students fully return to campus in September. 

Professional service firms such as law firms are a substantial segment of D.C.’s economy. Most of them are using a blended or hybrid model to bring employees back to the office. One study found that 54.5 percent of regional law offices were occupied and that a number of firms have announced they will return in 2022, including Cooley LLP, Baker & Hostetler and Gibson Dunn.  

As D.C. leaders wait for employees to return to the CBD, they are grappling with the impact of the sluggish homecoming on the city’s economy, as well as the effect on employees, their families and their well-being. The pandemic has taught everyone that employment is more fungible than thought, and employees have opportunities to choose their next stage.

The question is, will people want to return to downtown full time to restart their work lives and help rebuild the financial fortunes of their companies and communities? In this sense, returning to the office is an act of urban renewal and citizenship, bringing with it the promise of a vibrant urban life.

James R. Bailey is a professor of leadership development at the George Washington University School of Business. He is the author of five books and hundreds of articles, and the founder and editor of Lessons on Leadership. Follow him on Twitter @ProfJamesBailey.