The COVID-19 pandemic radically altered the way businesses operate, thrusting remote work and flexible arrangements into the mainstream. However, as the world inches back to pre-pandemic rhythms, 2025 is shaping up to be the year many companies push for a stronger return to the office. From corporate giants like Amazon and IBM to regional employers and public agencies, a growing number of organizations are mandating stricter in-person attendance policies. These changes are expected to have significant implications for employees, businesses, and the broader office real estate market.
A Shift Toward In-Person Work
Several high-profile companies have recently announced plans to require employees to return to the office, often for four or five days a week. Amazon, for instance, plans to end its hybrid model and require all corporate workers to return to offices full-time starting in January 2025. Similarly, Southwest Airlines and Dell are implementing stricter attendance policies, citing collaboration, culture, and productivity as key drivers.
Even companies that previously championed remote work are reversing course. Salesforce, a pioneer in flexible work policies, now requires many employees to work on-site most of the week. IBM has adopted a hybrid model for managers, mandating at least three days in the office, while the Washington Metropolitan Area Transit Authority and The Washington Post have introduced five-day-a-week requirements for their respective workforces.
These mandates reflect a broader trend: a growing belief among corporate leaders that in-person work fosters better collaboration, engagement, and efficiency. According to a recent KPMG survey, 85% of CEOs now expect their companies to return to a five-day workweek, up from 64% last year. This shift is being heralded by some as a return to normalcy and a boost for workplace culture.
What Does This Mean for Employees?
For workers, stricter back-to-office policies represent both challenges and opportunities. Many employees have grown accustomed to the flexibility of remote work, which allows for better work-life balance and reduced commuting time. Consequently, these mandates may create friction, with some workers resisting or even seeking employment elsewhere.
Companies like Starbucks have already issued warnings to employees who fail to comply with their hybrid policies, signaling potential terminations for those who resist. On the other hand, businesses argue that in-person work can enhance career development, mentorship, and team dynamics.
While some employees will welcome the return to structured office environments, others may struggle to adapt. Employers face the delicate task of balancing these divergent needs, offering incentives and fostering engagement to make the transition smoother.
Implications for the Office Market
The office real estate market has been one of the hardest-hit sectors during the pandemic, with national vacancy rates rising to a record high of about 14%, according to CoStar data. Hybrid work models and downsizing have left many office buildings underutilized, creating uncertainty for landlords and developers.
While stricter in-person mandates might seem like a boon for office space demand, experts caution that the effects may not be immediate or transformative. “For the most part, we haven’t seen return-to-office mandates translate into leasing demand,” says Phil Mobley, CoStar’s national director of office analytics. “There may be fewer move-outs now, but there hasn’t been much of an increase in leasing activity to drive any meaningful growth.”
Some landlords, like Kilroy Realty, remain optimistic. The company reports that tenants who previously reduced space are rethinking those decisions as they prepare for stricter office requirements. However, Mobley’s analysis suggests that high vacancy rates could persist or even rise over the next 12 to 18 months, as many companies continue to downsize or adopt hybrid models despite new mandates.
Key Trends to Watch
Leasing Activity: While the market may not see a significant surge in leasing in the short term, reduced move-outs and smaller footprint reductions could stabilize vacancy rates. Companies may also seek shorter lease terms as they navigate evolving work models.
Office Design: The push for in-person work may accelerate demand for modern, amenity-rich office spaces. Employers are likely to prioritize layouts that promote collaboration, wellness, and employee satisfaction.
Suburban vs. Urban Offices: As employees weigh commute times, suburban office spaces with shorter travel distances may see increased interest compared to urban offices in congested areas.
Tech and Flex Space: Flexible office solutions like coworking spaces may remain attractive for companies hesitant to commit to long-term leases. Technology integration, including tools for hybrid meetings, will also play a key role in office design.
Regulatory and Economic Factors: Local government policies, such as Washington, D.C.’s push to bring federal workers back, could influence office demand in specific markets. Broader economic trends, including interest rates and inflation, will also shape the sector’s recovery.
Long-Term Outlook
The return-to-office movement is a pivotal moment for the office market. While it’s unlikely to offset the structural changes brought on by the pandemic fully, it represents an opportunity for landlords and tenants to redefine the role of the office. Collaboration, innovation, and community-building are being positioned as the new cornerstones of office culture, but achieving these goals will require significant investment in both people and spaces.
For the office market, 2025 may begin a gradual recovery rather than a rapid rebound. Success will depend on how effectively companies, employees, and landlords adapt to the changing work landscape.