CoStar: Amazon and Seattle show what can happen when a big employer calls workers back to the office

This story was originally published by CoStar on June 15, 2023

To get a sense of how one company can change a local economy by calling workers back to the office, Seattle officials are looking closely at what’s happening in its downtown. The findings could hold answers for some major cities across the country.

E-commerce giant Amazon’s back-to-office mandate has contributed to a nearly instant burst of activity in and around the downtown, reflected by the highest levels of office foot traffic since the pandemic hit more than three years ago.

In May, 51% of all daytime workers were back at their worksites from Tuesday to Thursday compared with pre-pandemic levels. The largest increase was recorded in Denny Triangle, the office district that includes most of Amazon’s vast corporate headquarters, according to data provided by the Downtown Seattle Association and compiled by analytics firm Placer.ai.

Overall daytime foot traffic downtown, including tourists and other visitors, rebounded to roughly 2.5 million in May, about 92% of the same month in 2019, and a 10% increase over May of last year, according to the Placer.ai numbers, which are based on mobile phone location data. Midweek traffic in downtown offices increased 9.5% in May from the prior month, and 38.7% from the same time a year earlier.

The Seattle study comes as elected officials in some major cities across the country try to come up with ways to revitalize downtowns where restaurants, stores and other businesses that cater to office workers have closed, reducing tax revenue and foot traffic that can lead to an increase in crime. Elected officials in Washington, D.C.., have sought more federal workers back in offices, Chicago is encouraging the conversion of older office buildings to residential use, and San Francisco officials are taking steps to spur development.

In Seattle, officials are focused on the back-to-office effect. The data from Placer.ai offers the first full-month snapshot of downtown Seattle foot traffic since Amazon, the city’s largest employer, started enforcing its hybrid work policy mandate by requiring its thousands of downtown workers to return to its offices at least three days a week starting May 1.

Amazon and other Seattle corporate giants such as Farmers, Salesforce, Chipotle, Lyft, Disney, Snapchat and Meta have clamped down on in-office mandates over the past several months. The e-commerce giant employees more than 65,000 employees in the Puget Sound region.

“We know that our workforce has a significant impact on the vitality of our downtown areas,” John Schoettler, vice president of global real estate and facilities at Amazon, said in an emailed statement to CoStar News. “We’ve already seen an increase in foot traffic and we look forward to seeing even more people around our offices and downtown in the coming weeks and months.”

Foot Traffic Rises

There are challenges. The foot traffic is higher, but still lower than its peak before the health crisis. And the return-to-work policy has caused some blow back, with thousands of Amazon employees walking off the job late last month to protest the mandate and employees have asked for greater flexibility on how and where they work. However, activity has increased tangibly downtown since Amazon started enforcing the mandate in May.

The downtown association, a nonprofit organization that promotes businesses and advocates for economic development in the city’s central business district, called the report another milestone as more corporate giants crack down on remote work and fill empty offices in Seattle and other big cities.

“We’re excited to welcome thousands of office workers back to downtown,” Downtown Seattle Association CEO Jon Scholes said in a statement. “Street-level businesses are bustling, and we’ve set the stage for a great summer season of events.”

Other downtown activity, including traffic congestion and transit ridership, has also increased significantly over the past month, said Elliott Krivenko, CoStar director of market analytics in Seattle.

“The uptick in worker traffic was significantly higher than previous trends would suggest,” Krivenko said. “Following the trendline from the start of the year, traffic would have increased by about 9% in May from the previous month in the area immediately surrounding the Amazon campus. But instead, it increased by more than a quarter in May.”

Other cities are taking other approaches. In Chicago, a stretch of LaSalle Street in the Loop business district, which has served as the nation’s longtime commodities trading capital and was once the city’s unquestioned financial center, had six contenders for conversions into residences after a winnowing by the city’s planning department earlier this year. In Washington, the mayor urged the Biden administration to have government workers in offices more, and in San Francisco new rules would speed the process of some commercial development.

Long Way Back

In Seattle, despite the promising signs, overall office foot traffic is still well below pre-pandemic levels, Krivenko said.

“The additional few thousand workers visiting the area each day is only a fraction of the tens of thousands of Amazon workers tied to these offices,” he said. “That said, it is movement in the right direction for office utilization in the downtown area, even if it does not immediately translate to an increase in demand for more space.”

Returning workers are a key pillar of downtown’s economy and their weekday presence enlivens public spaces and provides a steady customer base to businesses, Scholes said.

The downtown employment base not only provides customers for restaurants and the businesses that cater to them, but also generate activity that gives a lift to the area, attracting more tourists, families and other visitors, said Ethan Stowell, chef, founder and CEO of Ethan Stowell Restaurants.

“Downtown has historically been a vibrant social and commercial hub, and the presence of our guests, friends and neighbors is the best way to ensure the continued health of our community,” Stowell said in a statement.

Office workers are a key element of Seattle’s local arts and cultural scene, said Bernie Griffin, managing director of The 5th Avenue Theatre.

“In addition to being patrons and audience members, workers create a bustling, energetic environment that encourages artistic expression, collaboration and cultural exchange. By having downtown workers return to the office and engage with the arts, the well-being of our entire community benefits.”