In Houston, Most Companies Are Back in the Office but Floors Are Half Empty

A big reason is that most Houston companies have implemented hybrid strategies, combining office and remote work. As this policy has played out, the average worker is showing up at the office about 10.7 days a month, compared with 17 before the pandemic, according to an analysis from Central Houston Inc., which represents downtown landlords, businesses and residents.

Central Houston’s chief executive, Kristopher Larson, suggests that Houston’s return-to-office rate will hit a “glass ceiling” limiting the post-pandemic return.

Houston and other Texas cities have been closely watched during the pandemic because workers there have consistently returned to the office at a higher rate than those in other states, according to Kastle Systems, the nationwide security company that monitors access-card swipes in 10 large U.S. cities.

The state’s low reliance on public transportation and decision to keep public schools open through most of the pandemic have paved the way for more workers to return to the office. Dallas, Houston and Austin last week recorded office-return rates of 51%, 52% and 58%, respectively, according to Kastle.

The Lone Star State offers an early glimpse into what the return-to-office movement might look like across the U.S. this year, as Covid-19 infection rates plummet and more companies enact back-to-work plans but offices remain well below capacity.

“It’s hard to imagine, when you look at office workers who can do their jobs remotely, that those numbers are going to get above 60% to 65% nationwide,” said Brian Kropp, chief of human-resources research for advisory and research firm Gartner. “This is just the remote hybrid future. We have kind of arrived.”

That future has enormous implications for the value of commercial property, the health of business districts and city tax revenues derived from real-estate owners. Thousands of restaurants, bars, stores, barbers and other small businesses throughout the country also depend heavily on commuters and office workers.

It is still unclear if workers are in the office for only two to three days a week what exactly that would mean for office-space demand. Some real-estate owners suggest any retreat in interest will be minimal, especially if companies need more space to spread employees farther apart for health considerations. But others note that many of the companies that have signed leases during the pandemic have opted for less space because they have adopted hybrid work strategies.

Nationwide the return-to-office rate has steadily risen since the Omicron variant peaked earlier this year. The 10-city average was 41% last week, up from 28% the second week of January, according to Kastle.

But even as Covid-19 fades, a new obstacle is emerging to a more full-fledged return to the office: higher gas prices. The cost of fuel was already rising, when the Russian invasion of Ukraine made it worse. Workers, especially those who have lower incomes, are pushing back against return-to-office plans, especially in states like Texas where most commuters drive, according to interviews that Gartner has had with dozens of heads of human resources.

“The viewpoint from a lot of employers is, ‘Yes. Go ahead. It’s totally fine to keep working from home as gas prices rise,’” Mr. Kropp said.

The remote-work trend poses a larger threat to office-space usage than gas prices. Some employers have insisted that workers return to offices five days a week. But many have found remote work hasn’t impaired efficiency, and others worry that if they don’t accede to employee requests for more flexibility, top performers might go to the companies that offer remote opportunities.

Companies have adopted hybrid strategies to give workers flexibility but also spend time in the office to promote collaboration, mentorship and the company culture.

In Texas, companies in a range of industries are adopting hybrid approaches. Halliburton Co. , one of the world’s largest oil-field-services companies, has about 3,200 workers in Houston, about one-third hybrid, one-third remote and one-third full time, according to a spokeswoman.

Chevron U.S.A. Inc., one of Houston’s largest employers with nearly 6,000 people in downtown Houston, allows workers two days of remote work per week, the company said.

Technology companies, some of which experimented with remote work before the pandemic, are allowing workers to work remotely most of the time. Cambium Learning Group, a Dallas-based education-technology company, made a “complete about-face” during the pandemic and embraced a “remote first” philosophy, ensuring employees could continue to work remote indefinitely, said Chief Marketing Officer John Jorgenson.

Bottle Rocket, a Dallas-based app and digital consulting firm, has adopted a strategy that will maintain an office in the city but has told employees that they can choose to work from anywhere.

“Companies will like employees to be in the office on a regular basis, but there’s a large segment of the workforce that doesn’t want that anymore,”  said Rajesh Midha, the firm’s chief executive.

Write to Peter Grant at [email protected]