After false starts, Wall Street hopes return to office will stick

New York’s office inventory means it has more riding on the return to office than most US cities.

An office worker enters the JPMorgan Chase & Co. headquarters in New York
Crime and quality of life have worsened around New York's business districts during the pandemic [File: Bloomberg]

Wall Street executives are taking another crack at bringing staff back to the office. This time, they’re hoping it sticks.

As cases of the omicron variant plummet and wide swaths of the industry’s workforce get vaccinated and boosted, financial giants including Citigroup Inc. and JPMorgan Chase & Co. have begun bringing more staff back to skyscrapers across New York City. Even after numerous false starts over the past two years, firms are hoping enough progress has been made that a slide back into full-scale remote work is unlikely.

“Barring another variant or a reversal in recovery from Covid, I think that the end of March will be a real turning point,” said Kathryn Wylde, president and chief executive officer of the Partnership for New York City. “Employers are anxious to get people back to the office, at least those with a strong office culture.”

Citigroup workers in the New York City region were asked to prepare to come back on Monday, while office attendance at JPMorgan, Goldman Sachs Group Inc. and Bank of America Corp. has been rising steadily in recent weeks. American Express Co. is planning to bring more workers into its tower on March 1 after delaying that process several times in the fall and winter. And Wells Fargo & Co. said Wednesday it’s planning to bring employees back to the office in mid-March, after the firm’s return plans were repeatedly upended last year due to Covid-19 surges.

Finance firms have been more adamant about bringing workers back than other fields, including technology, where many employees are still insisting on staying at home for part or even all of the workweek. That’s forced many banks to pledge to incorporate more flexibility into working in a post-Covid era, to avoid losing talented staff to other industries.

“As a society, we will find a way to live with it, supported by the efficacy of vaccines and new treatments,” Goldman Sachs CEO David Solomon said last month. “For our firm, this means being flexible and dynamic with our protocols to adapt to this new state of the world, while also enabling the majority of our people to be back in the office safely.”

Office Attendance

On Wednesday, Governor Kathy Hochul announced the state would drop its mask mandate for most businesses, stoking hope that New York would start to look a bit more like its old self. Additional states including New Jersey and California made similar moves.

New York has more riding on the return of office workers than virtually any other U.S. city. With about 1.5 million square feet (139,000 square meters) of office space per square mile, the city has more than 10% of the nation’s total office inventory, according to analysts at UBS Group AG. Some towers — such as the Empire State Building — are so large they have their own zip code. And reams of small businesses depend on the regular foot traffic of commuters for their livelihoods.

Office attendance plummeted to about 10% at the end of December and has slowly climbed back, with more than a quarter of workers now back in the office, according to data compiled by security company Kastle Systems.

“Governor Hochul’s decision to allow expiration of mask mandates in the workplace will encourage the return of employees to the office and accelerate the city’s economic recovery,” Wylde said. “It is the right call.”

More than 60% of Manhattan employers believe their daily office attendance will exceed 50% by the end of the first quarter, compared with about 23% of employers who said they expected to achieve that threshold by the end of last month, according to a January survey by the Partnership for New York City.

Optimism is growing even though the latest effort to return will be missing many of the incentives featured in previous attempts, such as free food and celebrations. And given the time of year, bankers will be trudging through snow drifts and freezing temperatures to get to work.

Some industry executives are coming up with unique ways to reward employees who make the effort.

At Jefferies Financial Group, it was an Instagram post by Richard Handler, the firm’s outspoken CEO, that had workers buzzing. On Jan. 31, Handler invited the first seven people to respond who were under 30 and in the office to join him for dinner that evening. Hours later, Handler was regaling them with tales of his career and personal life, and seeking feedback on the firm’s culture over a family-style dinner of upscale Chinese fare at Mr. Chow in Tribeca.

“Rich was giving a lot of advice on how to handle more responsibilities and how to excel in our career — it was a very cool opportunity,” said Anni Xu, a trader on Jefferies’s investment-grade desk who attended the dinner. “One of the biggest driving points of joining Jefferies was the access to senior leadership, so to be able to have such an intimate conversation with Rich Handler was very surreal.”

Wall Street executives have worried publicly that junior bankers and traders can’t get the same kind of training and mentorship over Zoom that they can from being in the office alongside more senior colleagues.

“The informal learning opportunities and conversations you can have in the office are some of the most beneficial,” said Liz Mastrio, an associate on Jefferies’s emerging-markets trading desk who also attended the dinner with Handler. “It is nice that it’s so much easier in the office, and you get that added bonus of that face-to-face contact.”

Safety Concerns

With the latest office return, there are signs that many workers have changed their commutes in ways that are likely permanent. While bridge and tunnel traffic has returned to pre-pandemic levels, ridership on the subway and the Metro-North commuter railroad is still just half what it once was as more workers shift to remote options and many remain skittish of exposing themselves to potential infections in a crowded commute.

Factors other than Covid-19 are playing a role as well, including rising crime. Industry heavyweights such as JPMorgan CEO Jamie Dimon, Goldman’s Solomon and Citigroup’s Jane Fraser weighed in last week in an open letter supporting Mayor Eric Adams’s efforts to improve safety in the city. Adams has announced plans to revive a controversial plainclothes anti-crime unit that had previously been disbanded.

Crime and quality-of-life worsened around business districts, neighborhoods, transportation and shopping strips during the pandemic, the CEOs said in the letter signed by some 200 business leaders, adding that “New York cannot recover from the devastating impacts of the pandemic without first restoring the sense of personal security that every resident, worker, visitor and community in our city has the right to expect.”

(Updates with additional states in seventh paragraph. A previous version of this story corrected timing in 14th paragraph.)

–With assistance from Amanda Gordon.


Source: Bloomberg