Around the world, workers are back in the office. Just not in America.

By Louis Goss and Barbara Kollmeyer

In Asia and Europe, workers are back in the office more often and consistently than in the U.S.

On a Friday morning in March, a number of salarymen, mostly wearing black or gray, streamed out of subway stations near the Shibaura district in Tokyo, where electronics company Toshiba, semiconductor company Sumco and automobile manufacturer Mitsubishi Motors are headquartered. Long lines formed at Starbucks and FamilyMart as the office workers grabbed their morning coffees and breakfasts.

A few hours later, as the sun rose in New York City, it was not a challenge to find an empty seat on the largely empty trains coming in from Westchester County or New Jersey, and Grand Central Station was not as bustling with rushing commuters as it had been the preceding Wednesday.

Week after week, the same dynamic plays out. On an April Monday in Madrid and London, trains and subways were standing room only, as workers crammed into train cars and rushed through crowded stations. The same was true on the subway in Copenhagen on a recent Friday morning.

The lingering effects of the pandemic and the Zoom revolution are continuing to shake up the workplace, creating dividing lines between the U.S. and many other developed countries. In Asia and Europe, workers are back in the office more often and consistently than in the U.S., where a strong job market and years of demanding and getting such perks has made working from home a more acceptable practice.

IBM (IBM), which in January told its U.S. managers to either return to the office or leave their jobs, has struggled to regularly draw its American staff back into the office, even as its workers in the U.K. have generally transitioned relatively smoothly back to in-person working, a person familiar with the matter told MarketWatch. IBM declined to respond to MarketWatch's request for comment.

Office workers speaking to MarketWatch outside offices in London in April said they had increasingly noticed that colleagues in Europe and Asia were working from offices while those in the U.S. were working from home. Their experiences are consistent with ridership data showing that public transportation use on weekdays is much higher elsewhere - in Milan and Paris, for example - than in places like Washington, D.C., and New York City.

At the same time, data from commercial real-estate agency Knight Frank further reveal the differences between the U.S. and the rest of the world, with office occupancy lowest on the U.S. West Coast - at rates of 30% - compared with 50% on the East Coast, 55%-65% in Western Europe and 85%-90% in China, Hong Kong and Japan.

"Having talked to a ton of executives in multinationals, the Asian offices are back, but in the same firm, the North American offices are not. When you ask them, everyone is refusing to come into offices in North America. They just want to come in two or three days a week," Nicholas Bloom, an economist at Stanford University, told MarketWatch in an interview.

Bloom has been studying remote work for nearly two decades, but the pandemic was a watershed moment for the practice. Last June, he published a research paper with colleagues that showed the growing gulf between U.S. workers and their global peers. His chart, below, showed differences in paid, full work-from-home days for workers with a university education, including those who have jobs that don't lend themselves to remote work, in April and May 2023 across major national economies. At the top was Canada, with people working from home 1.7 days each week. The U.S. was closely behind at 1.4 days, while workers in Germany averaged one day working from home each week and workers in Japan half a day.

The Stanford University economist attributes the global discrepancies partly to cultural differences. "The most important factor is culture, individualism," he said.

Bloom's research suggests that the push to bring workers back into offices is largely a top-down phenomenon, with workers in 34 countries on average wanting to work from home around three days per week and employers preferring that their staff work remotely two days per week.

In his view, the U.S. has the right idea. "The North American way, on this, is correct," he said, adding that the U.S. has traditionally led the way when it comes to taking up innovative management practices that are later adopted worldwide.

Employers, meanwhile, have struggled to enforce in-office mandates in the U.S. due to quiet resistance from workers. Surveys carried out by Bloom show that the most frequent response to rank-and-file staff who fail to come in on designated in-person office days has been no action at all, at least in the U.S. The second most common form of action was a verbal reprimand, the surveys show.

James Seppala, head of European real estate at Blackstone Group, the world's biggest commercial real estate investor, said that the office market has become increasingly concentrated since the pandemic as companies have sought out higher-quality spaces in prime areas in a bid to draw workers back in. This effect is particularly apparent in the U.S., where office vacancy rates have surged.

In New York, office-leasing activity remains subdued compared with before the pandemic. According to data from Newmark, a commercial real estate services firm, office-building vacancy rates are up significantly across Manhattan, from 11.8% in the first quarter of 2020 to as high as 18.5% in the quarter ending December 31, 2023. Across the entire U.S., office vacancy rates are even higher, at 19.6% in the fourth quarter of 2023, Newmark's data show.

Europe's major cities have much lower office vacancy rates. In Paris, rates stood at 8% at the end of 2023 and were 2.5% in the city's central business district, according to data from commercial real estate company CBRE. In Madrid, vacancy rates were 11.6% across the city and 4.7% in the prime business areas.

Approaches to remote working also vary by sector, with much higher rates in tech and the lowest rates in customer-facing industries like hospitality. This split has had an outsized impact on cities connected to the technology sector. In San Francisco, vacancy rates have surged to the highest levels across the entire U.S., following a collapse in office leases to technology companies, from 34.5% of all leases in 2019 to 10.1% in 2023, data from Newmark show. A total of 28.8% of San Francisco office space was vacant in the fourth quarter of 2023.

At the same time, rents in prime office-tower areas of major European cities have continued to rise in recent months, with rental costs in the swankiest areas of London, Paris and Brussels all going up by more than 7% in the fourth quarter of 2023, data from CBRE show. Dublin was the only major European city monitored by CBRE to see prime office rents drop in the fourth quarter of last year.

In cities like New York, San Francisco, Boston and Washington, D.C., office rental prices in prime areas fell in the fourth quarter, by 0.7%, 2.9%, 2.8% and 3.1%, respectively, CBRE data show. In Los Angeles, prime office rents increased by 1% over the same period, while rents in Chicago increased by 2.9%.

Other evidence of the divide in the global return to office can be found in public-transportation statistics, with ridership also appearing stronger outside of the U.S.

Sylvain Haon, senior director of strategy and transformation at the Brussels-headquartered International Association of Public Transport (UITP), told MarketWatch that the organization's most recent data show usage has rebounded more strongly outside of the U.S.

For example, the pace of ridership on public transport in 2023 was near pre-2019 levels in cities like Milan and Paris, with levels around 86% and 94%, respectively, versus 74% in New York City and 65% in Washington, D.C., according to data compiled by UITP and the American Public Transportation Association.

"What is clear is that when you compare North America to Europe, the pace of ridership is lower in the U.S.," Haon said, adding that on a recent trip to D.C., he had personally observed examples of that, including a quiet metro on a Monday morning followed by a "very, very busy" Tuesday.

Barry Sternlicht, chief of Starwood Capital Group, one of the biggest commercial real-estate investors in the U.S., has called the return-to-work situation in Europe and Asia the "bright spot."

"The office situation is a completely U.S. phenomenon," Sterlicht said at a conference held earlier this year. "Everybody is back to work except for Americans. We have gone off the deep end. We don't show up for work."

Sternlicht expects that U.S. companies will force their employees back to the office like their European and Asian counterparts have done once an economic recession hits the U.S. But there are also signs that European workers will instead take their lead from U.S. workers and start pushing to work from home.

In Berlin, Frank Zitka, head of communications at the German Civil Service Association, which acts as an umbrella organization for more than 40 unions, said his views have evolved throughout the pandemic. He now thinks union members in Germany will demand to work from home more often in future contract negotiations with management.

"As the results of the last trade negotiations for train drivers and the public debate have shown, the issue of working-hour flexibility, mobility and even reductions in work hours is high on the wish list of many employees in Germany," Zitka told MarketWatch. "It is to be expected that these issues will be important subjects when union demands will be discussed in preparing for upcoming negotiations."

One European company that has found it relatively easy to adapt to modern remote work is Amadeus, a Madrid-headquartered travel-tech provider that has more than 18,000 employees in over 100 offices worldwide. Those employees are allowed to work from home for 50% of the workweek.

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