Efforts to bring employees back to physical workplaces have increased over the past year. Many companies adopted hybrid or remote work during the COVID-19 pandemic, but recent federal government developments are pushing for a full return-to-office. What does this mean for multifamily housing demand near urban centers? How will vacancies, absorption, and migration patterns be affected?
A report by HRExchangeNetwork indicates that the private sector has led the charge on RTO mandates in the past year. High-profile organizations—Salesforce, Amazon, Meta, JPMorgan Chase, AT&T, Boeing, Dell Technologies, The Washington Post, and Major League Baseball—have all implemented RTO or hybrid policies. While some businesses still see value in hybrid arrangements, there is a noticeable tilt toward requiring employees to return to the office full-time.
As pandemic restrictions eased in Q1 2021, multifamily demand surged, driving vacancy rates to a historic low of 2.4%. Large metros such as New York City even dipped below the 2% vacancy rate, underscoring a quick rebound.
In January 2025, the Trump administration issued an executive order mandating that federal employees return to their offices by March 2025, barring approved telework arrangements. The policy echoes pre-pandemic attendance levels and is intended to “restore efficiency and cohesion across the federal workforce.” Historically, federal workplace trends often influence private sector policies, suggesting a broader shift toward in-office work across multiple industries. Private sector leaders are monitoring recent changes and many may fall in line to avoid clashing with policy changes.
Given that many private employers align with federal directives for risk mitigation and operational cohesion, this development could lead to a widespread resurgence of office-based work, particularly in large, transit-oriented cities.
After the initial wave of remote work in 2020:
Several metropolitan areas are anticipated to see a notable uptick in multifamily demand as renewed RTO mandates take effect.
During the pandemic, smaller cities, often dubbed “Zoom Towns,” benefitted from remote workers seeking affordability and lifestyle amenities. Now, as RTO mandates grow, these markets may see slower in-migration or even out-migration trends.
Local Economies: Higher foot traffic from daily commuters boosts demand in retail, dining, and service sectors, especially in cities with dense government and corporate offices.
Commercial Real Estate Revival: With growing in-office mandates, office occupancy is stabilizing, prompting new development and repositioning opportunities.
Infrastructure Demand: Influx of workers strains public transit, roads, and utilities, compelling local governments to invest in upgrades.
Renewed Urban Focus: Proximity to workplaces becomes paramount, reversing pandemic-driven suburban migration and pushing urban vacancy rates lower.
Market Divergence: Demand intensifies for both high-end rentals (serving well-paid professionals) and more affordable workforce housing.
Rent Growth: As vacancies tighten, properties near large federal or corporate offices can command higher rents, reflecting rising occupancy pressures.
The federal government’s return-to-office order, coupled with a growing list of private sector mandates, signals a new era for urban gateway cities. Multifamily housing near corporate and government offices stands to gain, while secondary markets that thrived during the remote-work era may see slowing growth.
For investors:
