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COVID surge puts brakes on Austin's return-to-office plans

Lori Hawkins Kara Carlson Shonda Novak
Austin American-Statesman
Social media and reputation manager Daniel Wiersema works alone in a conference room at the Zebra's offices on Aug. 11. The insurance technology company has kept its offices open amid the pandemic, with rules and restrictions. Employees must book conference rooms to privately work from the office.

September was supposed to be the month that Austin companies — many of them shuttered since spring of 2020 — began fully reopening.

Now, due to the latest surge in coronavirus cases, many are postponing those plans and yet again rethinking how a return to the office will look.

In mid June, Austin real estate tech firm Ojo Labs reopened its headquarters on South Congress Avenue for optional in-office work a few days a week. The plan was to fully reopen the 160-person office after Labor Day, while continuing an option to work from home.

But as Austin shifted to Stage 5 COVID guidelines, those plans have been put on hold. 

"We have made the decision to close the office for a brief period," said Angela Dunham, chief operating officer for Ojo Labs. "We want to do our part as a company to keep Austin and our employees safe. Every day I'm on the Austin dashboard, every day I'm monitoring the numbers."

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Empty chairs and tables fill the offices at the Zebra in Austin. The insurance technology company has kept its offices open amid the pandemic, with rules and restrictions.

Amber Gunst, CEO of the Austin Technology Council, said for several months things seemed to be looking up for tech companies and workers as vaccines and lower case counts brought more opportunities to live and work in ways that suited them.

Tech industry giants from Dell Technologies to Facebook to Google, who had been among the first companies to start sending workers home in March 2020, were looking to fall as a chance to finally meet and collaborate in person, targeting office reopening dates in conjunction with the return to school.

But as COVID-19 cases resurge in many areas, and new CDC guidelines encourage even vaccinated people to mask up in areas of high transmission, many companies are reevaluating return plans. 

“This has been an exhausting process for company leaders to navigate. This is especially difficult as tech workers have a high rate of vaccination and many are eager to return to collaborative environments together. The important issue right now is keeping children and medically fragile individuals safe and executives take that responsibility seriously,” Gunst said. “Employers are eager to see their employees and begin the process of reuniting their teams, this setback is a disappointment for everyone.”

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Round Rock-based Dell Technologies, which was supposed to reopen many of its office sites on Sept. 7, has joined a growing number of tech companies in pushing back those dates. In a company-wide email, chief operating officer Jeff Clarke told employees the company was pushing pause on that plan, with no new date in mind to fully reopen. Dell also said any of its offices that are already open would require everyone to wear a mask, regardless of vaccination status. 

“We know some of you will be disappointed by this update. We’re all excited to see each other in person again. Others may be a bit relieved, given the prevalence and unknowns of the (coronavirus) delta variant.  It’s been a long, hard road, and we hoped we wouldn’t find ourselves back here. But the data and science tell us this is the right decision for now. It also reinforces that vaccines help,” the email said. 

Delayed returns, vaccine requirements

Apple, which has more than 6,000 employees in Austin, delayed its return to the office until October. It also reinstituted mask recommendations and requirements to its retail stores. Prior plans had called for Apple’s tech office workers to return to the office Mondays, Tuesdays and Thursdays starting in September. 

Google, which has more than 1,500 employees in Austin, pushed its return date from September to mid-October and announced it will require all employees be vaccinated before they return. 

Facebook, which reopened its Austin office at 25% capacity in July, said it will require all employees to be vaccinated before they return to the office. Central Texas is Facebook’s fourth-largest hub with more than 2,000 employees. The company plans to slowly raise capacity in the coming months, but said most employees will be allowed to work from home beyond the pandemic. The company recently said it will not require any workers to return until January, pushing back previous plans that hadOctober.

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“As our offices reopen, we will be requiring anyone coming to work at any of our US campuses to be vaccinate," Lori Goler, Facebook's vice president of people, said in a written statement. "How we implement this policy will depend on local conditions and regulations. We will have a process for those who cannot be vaccinated for medical or other reasons and will be evaluating our approach in other regions as the situation evolves. We continue to work with experts to ensure our return to office plans prioritize everyone's health and safety.” 

Gunst said the majority of executives in Austin are encouraging employees to be vaccinated, with many companies passing on information on how to get vaccinated and some offering to bring in popup clinics to their business. 

Gunst said the conversation is ongoing about when Austin tech workers return to the office and what that return will look like. While tech companies would prefer to reopen offices and have their workforce return, they have been able to operate and remain profitable amid the pandemic, Gunst said.

“Most are preparing to call off return to office, but also playing it by ear. At the least, they will offer employees the choice to return. Most companies are leery of putting employees' health at risk right now,” Gunst said. 

Other companies that remained open or recently reopened are increasing their safety protocols amid the latest COVID surge in Austin.

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The Zebra, an Austin-based insurance technology company, kept its offices open amid the pandemic, with safety protocols that have flucuated according to health recommendations over the course of the pandemic.

Nicole Beck, a spokesperson for the Zebra, said navigating the pandemic and planning office guidelines has been a challenge because there’s no frame of reference. The  company formed a COVID task force to determine best practices, following guidelines from the U.S. Centers for Disease Control and Prevention and local health officials. 

Because Austin public health guidelines are in Stage 5, the city’s strictest recommendations, employees must take a health screening prior to entering the office, must work alone in a conference room and wear a mask in all common areas. The company is also asking unvaccinated employees to stay home until the city is back to a Stage 3 on its COVID guidelines.

When the office is fully open, the Zebra’s 325 employees will have a choice of how often they want to come in and will be allowed to continue to work remotely if they choose, according to the company.

A number of Austin companies are looking at similar options.

“Companies are giving employees the option to be able to have a little bit of flexibility, but also understanding that they do need to talk to their employees and they do need to bring people together so that they can have great work experiences again,” Gunst said.

'Situation remains fluid'

Sam Houston, office partner with Austin-based HPI Real Estate Services and Investments, said the goal many companies had been working towards was to get back to the office no later than Labor Day.

But with the spike in coronavirus cases, many companies are pushing that back to the October-to-January timeframe, he said.

Many of the large tech companies have postponed their return-to-office dates, while small- to medium-sized companies "have been doing everything they can to get people back to the office," Houston said.

Houston said HPI's employees in the four cities in which it has offices (a total of 190 people altogether, including 120 to 130 in Austin) have been back at their desks since April.  He said HPI is not requiring employees to be vaccinated.

Sam Tenenbaum, director of analytics for CoStar Group, a global commercial real estate data company, said that with some tenants delaying their return-to-office plans in response to the jump in COVID cases, "the situation remains fluid."

Tenenbaum cited data from Kastle Systems, a security company that tracks badge swipes in offices, showing that the "physical occupancy" rate (the percentage of workers back in the office) in Austin offices was 51.4% at the end of July.

That was the highest rate of any city tracked by Kastle, which has been analyzing keycard and other access data from 2,600 buildings and 41,000 businesses across 47 states to identify trends in how Americans are returning to the office.

In the office market in general, company relocations and expansions are fueling Austin’s office market recovery, local commercial brokers and market experts say.

"The market itself is rebounding – we’re certainly not back to pre-pandemic levels of vacancy, sublease space, and leasing activity, but we’re starting to see nascent signs of a rebound," Tenenbaum said.

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An empty common area is reflected in the door as public relations manager Danielle Marchell works in a conference room at the Zebra's offices in Austin on Aug. 11.

Ripple effects

Although the Austin office market figures show strength, the delay of return to the office by the region's biggest tech employers is a worst case scenario for merchants across town who were counting the days until September re-openings.

The pandemic hit Austin's central business district hard, forcing the closure of some businesses and, for many months, emptying its streets and shuttering storefronts, restaurants and nightclubs.

When scores of employees at downtown offices shifted to remote work and tourism evaporated, it was a double whammy for local businesses, said Jenell Moffett, associate vice president of strategic initiatives for the Downtown Austin Alliance, a group of merchants and property owners.

Leisure travel has rebounded to some extent, but merchants say they need workers to return.

"Weekends are nearing what we saw pre-pandemic," Moffett said. "But the daytime is still lagging behind. That lunch time crowd isn't there, and restaurants and retailers cater to that time frame. They are still waiting it out in anticipation of that next wave of return to the office."

Shelley Meyer, owner of all downtown-located Wild About Music, Austin Rocks, Toy Joy, and Yummi Joy, said the bounce from tourism has been encouraging, but that doesn't make up for the absence of office workers that provided consistent flow of traffic Monday through Thursday.

"We were so optimistic, but that was before the delta variant spiked," she said. "Now we are just waiting and crossing our fingers. We need the downtown workers back."

Ray Perryman, president of the Perryman Group, a Waco-based economic research and analysis firm, agreed that the reopening of offices is crucial to many Austin  merchants.

"Many businesses in downtown areas rely on office workers for their very survival," he said. "Restaurants, coffee shops, retail stores, and a variety of types of services locate proximate to concentrations of office workers and have been struggling to survive. The longer the delays, the more of these businesses will permanently close or otherwise struggle. Given the political climate, I doubt that much in the way of additional government support will be forthcoming."

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Wrist bands indicating comfort levels for interactions are set out for employees in the lobby at the Zebra's offices on Aug. 11. The insurance technology company has kept its offices open amid the pandemic, with rules and restrictions.

Perryman said that from an overall regional economic perspective, as long as workers are still spending money in the local economy, there are still benefits. For example, restaurants and other businesses near neighborhoods where workers live could be benefiting from them working from home.

"From the perspective of the tech companies themselves, most of them are well equipped to be productive with remote workers, particularly after the experiences of the past 18 months," Perryman said. "There is always a benefit to the synergies of having people collaborating face-to-face, but the firms of this type in Austin can generally move forward."

But for those businesses depending on tech workers: "It's a difficult and unfortunate situation. Once workers return to offices, they will want nearby options, and the market will respond. In the interim, however many individual business in the area will likely struggle and face hardships."

Mark Sprague, who follows the economy and housing markets both locally and nationally, agrees that until offices fully reopen, Austin businesses will feel the pain.

"Any delay in getting the economy back causes ripple effects," said Sprague, director of information capital with Independence Title in Austin. "We've been told since day one we would have mutations. It's suppressed business and this latest wave is suppressing businesses again."