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The “Great Return” Is in Motion; Workers, Students, Companies and Travelers Re-Embrace the City Center

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As of April, many big tech and financial corporations have called employees back to the office and that should have a trickle effect for medium size and small firms to follow suit. Recent badge scans indicate a nearly 42% average occupancy by month-end. This is up markedly over last April, when national office occupancy hovered around 26%, and April 2020, when the U.S. was only at 8% occupancy. Sun Belt markets are leading the way, with cities such as Austin and Houston already crossing the 50% occupancy mark. Re-entry is likely to continue its steady rise in the coming months.

As office occupancy rises, urban hotel and group room demand has risen in lockstep. In the last week of April, group demand reached 6.2M room nights, the highest total since the onset of the pandemic. Additionally, urban hotel RevPAR outperformed other hotel segments in March with a 119% increase compared to the March 2021 pandemic trough. This improving demand has translated to renewed investor optimism as urban hotel liquidity reached a six-year high in February 2022 (on a trailing 12-month basis), with a 12% increase in transaction volume relative to pre-pandemic levels.

Large gateway cities such as New York have lifted most of the remaining COVID restrictions, which has resulted in an uptick of metrics across the board, including increased subway ridership, the return to full in-person schooling, a hot home sale and rental market and an almost full recovery to pre-pandemic restaurant reservation bookings. The shows the city’s economic recovery is four-fifths of the way back to early March 2020 levels.

On a wider basis, recently analyzed more than 100 cities globally to identify the most attractive cities for people, business and capital. Not surprisingly, gateway cities such as San Francisco, Boston and New York all rank in the top markets for innovation and talent, both of which are noted to be key drivers of the next cycle of urban renewal.

The road ahead may still present some headwinds but the myriad of positive indictors surrounding return to office, return to travel and the resiliency of gateway cities should not be overlooked.

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