The Return to Office: Stabilizing Commercial Real Estate and the Rise of Tenant Amenities

The COVID-19 pandemic dramatically shifted the landscape of commercial real estate, with widespread remote work and flexible office policies leading to concerns about rising office vacancy rates. However, recent trends suggest that the return to office mandates implemented by many companies have played a significant role in stabilizing the market. This article delves into the impact of return-to-office mandates on commercial real estate office vacancy rates, the evolution of tenant amenities in office buildings, which office owners hope will drive increased occupancy rates, and the associated costs and potential returns on investment for landlords.

Return to Office Mandates and Stabilizing Office Vacancy Rates

The initial surge in remote work during the pandemic resulted in a sharp decline in office occupancy rates and a corresponding increase in vacancy rates. Landlords faced the challenge of attracting tenants in a market where remote work was becoming increasingly normalized.

However, the gradual implementation of return-to-office mandates by companies across various industries has begun to reverse this trend. Many of these organizations have adopted hybrid models, typically requiring between one to four days in the office per week.

Return to Office Policies Vary Greatly

According to CBRE, approximately 87% of U.S. organizations have implemented policies requiring employees to work on-site at least part of the week (whether these policies are strongly enforced varies considerably by organization), with 66% of organizations expecting attendance at least 3 days per week. Only 8% mandate a full five-day office presence.

Source: CBRE 2025 Outlook for Office Attendance

A Broader Trend Towards In-Person Work

It’s important to note that these figures can vary significantly across different industries and organizations, depending on specific job requirements and company policies. The federal government and several prominent companies have recently implemented return-to-office (RTO) mandates, reflecting a broader trend toward increased in-person work. Notable examples include:

U.S. Federal Government: On January 20, 2025, President Donald Trump signed an executive order stating that all federal agencies must, as soon as is practicable, take all necessary steps to terminate remote work arrangements and require employees to return to work. Iowa Senator Joni Ernst wrote in a 2024 report that only 6% of federal workers work in-person full time, while one-third work fully remotely.

However, in a report to Congress in August 2024, the U.S. Office of Personnel Management noted that 54% of the 2.3 million civilians employed by the U.S government work entirely in-person due to the nature of their jobs. About 10% work entirely remotely. Since many federal employees do not work in an office setting, the net effect on occupancy rates due to President Trump’s recent order is yet to be quantified. However, there is a strong likelihood that regions with a robust federal workforce, such as Washington D.C., would be positively affected.

Amazon: CEO Andy Jassy announced that, effective January 2, 2025, all corporate employees are required to work on-site five days a week, a shift from the previous hybrid model allowing two remote days. This decision aims to enhance collaboration and innovation.

Sonos: The audio equipment company has mandated that product team members residing near U.S. offices work in-person at least two days per week. This policy seeks to improve collaboration and product development following recent challenges.

JPMorgan Chase: The banking giant requires senior leaders to be in the office five days a week, with other employees following a hybrid schedule. CEO Jamie Dimon emphasizes the importance of in-person work for mentoring and maintaining corporate culture.

Disney: CEO Bob Iger has mandated that corporate employees work on-site four days a week, citing the irreplaceable value of in-person collaboration for fostering creativity and innovation.

Starbucks: The coffee chain requires employees to return to the office three days a week, aiming to strengthen team dynamics and company culture.

These mandates have sparked varied reactions, including employee resistance and discussions about productivity and work-life balance. The evolving landscape suggests that companies are continually reassessing work models to align with organizational goals and employee expectations.

RTO Mandates and Office Vacancy Rates

Several factors contribute to the stabilizing effect of return-to-office mandates on vacancy rates:

  • Increased Demand for Office Space: As more employees are required to return to the office, the demand for office space naturally increases. This renewed demand helps fill vacant spaces and reduce overall vacancy rates.
  • Re-evaluation of Remote Work Models: While remote work has proven to be effective for certain roles, many companies are realizing the value of in-person collaboration and the social aspects of office environments. This recognition has led to a shift away from fully remote models and a renewed emphasis on office space.
  • Economic Recovery: The ongoing economic recovery has also contributed to the stabilization of vacancy rates. As businesses regain momentum and expand their operations, they often require additional office space to accommodate growth.

While return-to-office mandates have undoubtedly played a role in stabilizing vacancy rates, it is important to note that the impact varies across different markets and industries. Factors such as local economic conditions, industry-specific trends, and company-specific policies can influence the extent to which return-to-office mandates affect vacancy rates in a particular area.

Tenant Amenities: Enhancing the Office Experience

To attract and retain tenants in a competitive market, landlords have increasingly focused on providing a wide range of amenities within their office buildings. These amenities are designed to enhance the overall office experience, foster productivity, and attract tenants who value a modern and comfortable work environment. They often include:

Fitness Centers

High-End Equipment: Landlords have invested in top-of-the-line fitness equipment from brands like Peloton and Life Fitness in their buildings to attract fitness-conscious tenants.

Virtual Fitness Classes: Many landlords have partnered with virtual fitness platforms to offer a variety of on-demand and live-streamed classes, allowing tenants to work out on their own schedule.

Personal Training Services: Some landlords offer on-site personal training services, providing tenants with access to certified fitness professionals.

Cafeterias and Food Courts

Gourmet Food Halls: Landlords have created gourmet food halls featuring a variety of cuisines, such as international food trucks and local eateries.

Healthy Food Options: Many landlords are partnering with health-conscious food vendors to offer fresh, organic, and locally sourced food options.

Mobile Ordering and Delivery: To cater to busy professionals, landlords have implemented mobile ordering and delivery services, allowing tenants to order food from their desks and have it delivered to their office.

Outdoor Spaces

Rooftop Gardens: Landlords have transformed rooftop spaces into lush gardens with outdoor seating, fire pits, and stunning city views.

Outdoor Workspaces: Some landlords have created outdoor workspaces with Wi-Fi and power outlets, allowing tenants to work outside on sunny days.

Community Events: Many landlords host outdoor events, such as yoga classes, movie nights, and live music performances, to foster a sense of community among tenants.

Concierge Services

Package Management: Landlords have implemented advanced package management systems, including automated lockers and concierge services, to ensure efficient delivery and pickup of packages.

Dry Cleaning and Laundry Services: Some landlords offer on-site dry cleaning and laundry services, saving tenants time and hassle.

Pet Care Services: To cater to pet owners, landlords have partnered with pet care services, offering dog walking, pet sitting, and grooming services.

Event Spaces

Flexible Meeting Rooms: Landlords have created flexible meeting rooms with state-of-the-art technology, allowing tenants to host meetings, conferences, and workshops.

Event Planning Services: Some landlords offer event planning services, helping tenants organize and execute successful events.

Virtual Event Capabilities: In response to the pandemic, many landlords have equipped their event spaces with virtual event capabilities, allowing tenants to host hybrid events.

Co-working Spaces

Soundproof Pods: Landlords have installed soundproof pods to provide tenants with private, quiet spaces for focused work.

Collaborative Workspaces: Many landlords have created collaborative workspaces with shared desks and communal areas, fostering teamwork and innovation.

Networking Events: Some landlords organize networking events, connecting tenants with potential clients, partners, and investors.

End-of-Trip Facilities

Secure Bike Storage: Landlords have built secure bike storage facilities, complete with bike racks, repair stations, and showers.

Electric Vehicle Charging Stations: Many landlords have installed electric vehicle charging stations to accommodate the growing number of electric vehicle owners.

Locker Rooms and Showers: Landlords have provided locker rooms and showers, allowing tenants to freshen up after a workout or a long commute.

Cost of and Return on Investment on Tenant Amenities

The cost of implementing and maintaining tenant amenities can vary significantly depending on the specific amenities offered, the size of the building, and the location. Landlords must carefully consider the potential return on investment associated with each amenity before making a decision on whether to proceed.

Some amenities, such as fitness centers and cafeterias, can be costly to build and operate. However, they can attract tenants who value a healthy and convenient work environment, potentially leading to higher rental rates and longer lease terms. Other amenities, such as co-working spaces and event spaces, can generate additional revenue through membership fees or rental charges.

Landlords must also consider the long-term benefits of investing in tenant amenities. By creating a more attractive and desirable office environment, landlords can improve tenant satisfaction, reduce turnover, and attract high-quality tenants. This can lead to increased rental income, higher occupancy rates, and a stronger reputation in the market.

Commercial Real Estate Investors Are Eyeing Office Buildings Again

Office landlords are leveraging low office valuations to position themselves, either through a market recovery or repositioning strategies, to take advantage of a soft commercial real estate market. Investment in modern, high demand amenities is a key part of that strategy.

Another strategy is converting space for flexibility. Landlords are reconfiguring large, traditional office spaces into smaller, flexible units that cater to hybrid work models. Additionally, landlords are partnering with or creating co-working spaces to cater to startups and smaller businesses.

By acquiring properties at low valuations, landlords are betting on future market rebounds to sell or refinance at higher valuations. By enhancing the office experience to create a “destination workplace,” opportunistic landlords encourage tenants to commit long-term.

In 2023, Oregon investor Menashe Properties expanded its portfolio into Chicago for the first time after purchasing 29-story 230 West Monroe St. While the building was 40% vacant at the time of purchase, Menashe immediately modernized the lobby, renovated the fitness center, and removed the monthly fee for use of the fitness center. Future plans in 2025 include the opening of a new coffee shop and the addition of a bike room for commuters.

Menashe Properties’ CEO Jordan Menashe was quoted in CoStar News as saying, “Is office dead? The answer is no.” Purchasing 230 West Monroe St. at an 11% cap rate allows him the financial flexibility to add amenities and make it more welcoming to tenants and their employees. Menashe says, “We have to make it more fun.”


Some Final Thoughts on Return to Office Mandates and Tenant Amenities

Return-to-office mandates have played a crucial role in stabilizing commercial real estate office vacancy rates by increasing demand for office space and encouraging a shift away from fully remote work models. Landlords have responded to the changing needs of tenants by investing in a wide range of amenities designed to enhance the office experience. While the cost of these amenities can be significant, the potential return on investment, in terms of increased tenant satisfaction, higher rental rates, and longer lease terms, makes them a worthwhile investment for many landlords.


Additional Resources and Information on Office Real Estate

Depending on your investment goals and strategies and appetite for risk, the time might be right to invest in office buildings again. If you are considering buying or investing in office assets, we have some additional resources on our website that can help guide and educate you and help you maximize your ROI.

In our blog, there’s a comprehensive six-part part series on how to develop a thorough, effective due diligence strategy to help you accurately gauge commercial properties you are considering acquiring or investing in, including office buildings.

In addition, there’s a timely and relevant post on how technology is completely transforming office building operations. It discusses how smart building technologies can substantially reduce operational costs, thereby boosting ROI; how automation and data analytics can help property managers and their teams work more efficiently; and much more.


Help With Your Office Building Acquisitions and Investments

If you are considering acquiring or investing in office properties, whether it’s your first time or you’ve been doing it for years, Realogic offers a wide range of services, solutions and insights to help you identify the best acquisition and investment opportunities, make the right investment decisions and maximize your returns on your office assets. These include:

For more information on our best-in-class commercial real estate services and solutions, contact us at info@realogicinc.com or 312-782-7325


About The Author

Mike Phelps is Realogic’s General Counsel. Mike has over 20 years of commercial real estate experience, including with financial modeling and analysis, analysis of acquisitions and dispositions, due diligence, underwriting, development and review of financial proformas and Argus/Dyna training. In his current role, he supports each of Realogic’s business lines and provides counsel on corporate, employment and compliance issues. He is also responsible for negotiating contracts, master service agreements, software licenses and subscriptions and other intellectual property matters. Mike welcomes your comments on his post. He can be reached at mphelps@realogicinc.com