KUOW: Hybrid work and Seattle’s bottom line: Today So Far

This story was originally published by KUOW on April 12, 2022.

By: Dyer Oxley

After two years of pandemic precautions pushing a considerable portion of employees to work from home, things are changing. Will hybrid schedules, or working from home, stick with us? Or will we experience a mass return to the office?

How this plays out has the potential to greatly influence a city’s bottom line.

This post originally appeared in KUOW’s Today So Far newsletter for April 12, 2022.

Downtown Seattle’s share of remote workers was already at an all-time high in 2019 — 6%. In the decade leading up to that, the area averaged about of 3-5% remote workers.

“In 2021 it was 46%. And that’s worksites of all size in downtown,” said Madeline Feig with Commute Seattle.

You read that right — 46% of downtown commuters went remote last year, according to a survey that Commute Seattle and the Downtown Seattle Association conducted in late 2021 (before the winter omicron wave). And if you are going to go remote, Washington state is a pretty great place to do it. WalletHub just ranked Washington as the eighth best state to work from home.

But Seattle (along with most major cities) is about to figure out how to manage its work/life/remote habits once again as companies bring people back into the office, where it’s a lot easier to fill out those cover sheets for your TPS reports. But how will this mix of full-time office work and hybrid schedules play out?

Dyer prediction: While Seattle is about to see a return to the office (and the commuter culture that comes with it) it’s not going to be the same as the Before Times. We are likely to see a significant level of remote work and hybrid work remain. And while that can be a good thing (it’s what many, especially younger, workers want), hybrid work may have some businesses, and local governments, anxious.

While I got to stay at home the past couple of years — writing this newsletter wearing dive bar t-shirts and my Star Trek socks — there were a lot of employees who didn’t have that option. Remote work wasn’t available for small shops, food service, grocery stores, and other places of work. And those businesses partially rely on commuters, much like tourists. Just as travelers bring out-of-town dollars into Seattle, commuters do the same when they drive/ride in from Issaquah, Everett, Tacoma, Maple Valley, or wherever housing is affordable these days. They leave behind money for coffee, lunches, and movies when coworkers believe they are at long doctor appointments. The city also gets a cut of all that tax revenue.

Any decline in commuters and rise in hybrid schedules has the potential to hit small businesses and local governments. According to a new PEW study, “Changes in how Americans work, made in response to the Covid-19 pandemic, could have long-lasting implications on tax revenues in cities with significant numbers of commuters …. Fewer commuters — or workers who commute less often — could translate into a shrinking local revenue base and contribute to long-term fiscal challenges for local governments.”

PEW looked at 10 major U.S. cities, but unfortunately did not consider Seattle. But the absence of commuters is certainly known around downtown, however.

“We anticipate the return of more major employers to the office in 2022, which is essential to our economic vitality,” Downtown Seattle Association President Jon Scholes wrote in the DSA’s recent State of Downtown report. The report further states that the shift to remote work has prompted a “cost to small businesses, the service industry and the downtown community as a whole.”

The report notes that 40% of downtown Seattle workers live within the city limits, which means all those people working in industrial SoDo up through First and Capitol Hills, on through techy South Lake Union, are making local trips. That also means the majority of workers are commuting in from somewhere else.

Seattle commute habits

According to Commute Seattle’s commute mode split survey, between 2019 and 2021:

• • Seattle’s share of downtown commuters using transit dropped from 44.4% to 18.6%
  • Walking declined from 7.4% to 4.4%
  • Rideshares dropped from 9.2% to 2.7%

The only mode of transportation that didn’t experience much of a change was single-occupant cars, which continued to hover around 26%. It seems that when workers went hybrid, they opted to drive to work on the days they went into the office.

“The single-occupant vehicle share for folks who make one or two trips a week is astronomically higher than it was,” Feig said. “We had a really low, 25% drive alone rate in 2019, which is kind of unheard of in a large metropolitan area … but now we’re seeing that up to about 50% for people coming in one or two days a week.”

“What we are concerned about … the pattern that is arising, is that when people work remotely, they are defaulting to driving alone to work when they do drive in,” she said.

The recent State of Downtown report states that, moving forward, 70% of downtown employers plan to have employees “spend some time in the office, with the majority anticipating 50-100% of the time in person.” That’s a wide range of hybrid possibilities.

One corner of Seattle’s job market is betting on office work thriving in the years ahead — offices. Despite the remote work surge over the past couple years, office rents did not drop as much as many expected; not as far as the setbacks Seattle experienced in 2002 and 2009, according to the State of Downtown report. Over the past couple years, building projects added 2.5 million square feet of office space to Seattle. And that space is expensive. PropertyShark just ranked six office markets in the Seattle area as among the 100 most expensive in the United States. Seattle’s Central Business District is selling office space at an average of $669 per square foot, which far exceeds California’s $392 and the nation’s average of $237.

So, sorry micromanagers, hybrid/remote work has made an impression and won’t entirely go away. And we should be aware that this has the potential to chip away at a few bottom lines.

But in good downtown news, 170 new street-level businesses did open up during the first part of 2021. And despite the pandemic slowing down commuters, downtown residents continued to grow. There are now more residents in downtown Seattle than ever before. And a plus for ferry commuters, the galleys are back to serving food.