Remote and hybrid workers will impact more than office vacancy rates, according to an analysis by the Federal Reserve Bank of Kansas City.
The report, “Hybrid Work May Pose Challenge To Bars and Restaurants in Parts of the Tenth Federal Reserve District,” stated hybrid work arrangements and a preference for remote work are here to stay. It quoted research suggesting approximately 30% of working days in 2023 took place at home and office occupancy is down at least 40% compared to pre-pandemic levels.
According to the report, more employees working from home or those with hybrid working arrangements will influence foot traffic to nearby businesses, especially bars and restaurants. Plus, previous research from the organization indicates hybrid work might have a long-term impact on home construction, business location and commuting.
The report stated the nationwide average for office space in office-dense areas is 19%. In the 10th District, comprised of Colorado, Kansas, Nebraska, Oklahoma, Wyoming and portions of Missouri and New Mexico, the range is 0% in Wyoming to 33.5% in Colorado. Missouri’s amount of office space in office-dense areas was 17.7%.
“Although most Tenth District states have less office space in office-dense areas than the national average, businesses in these areas may still be hit by the effects of hybrid work,” according to the report. “Bars and restaurants are especially dependent on foot traffic, making them potentially more vulnerable to any drop in traffic to the zones in which they are located. … Given this higher proportion, bars and restaurants in Colorado and Nebraska may be especially vulnerable to any loss of office-worker foot traffic since the pandemic.”
“In these states, as in the rest of the nation, daytime foot traffic in office-dense areas has yet to return to pre-pandemic levels,” the report added.
However, the report said the businesses within walking distance of the offices depend on more than the concentration and prevalence of those customers.
“Other factors, such as proximity to entertainment venues, can also influence foot traffic to businesses,” the report stated. “Although office vacancy rates may be forecast to rise in most places, strategies to increase foot traffic for non-work purposes could reduce vulnerability for businesses located in office-dense areas.”
