As companies adapt to the complexities of return-to-office (RTO) mandates across both public and private sectors, the office market is undergoing significant shifts. President Donald Trump’s recent executive order requiring federal employees to return to in-person work has only added further momentum to this trend, reinforcing the push for physical office spaces. While some areas have seen an uptick in leasing activity, the question remains: Is this a true recovery or just a temporary adjustment?

For deeper insights, we turn to two industry experts—Justin Cazana, SIOR, of Avison Young in Knoxville, Tenn., and William O’Brien, SIOR, of M.C. O’Brien Inc. in New York City. These two cities occupy different ends of the RTO spectrum.

Knoxville, a fast-growing city in a traditionally conservative state, saw an early return to in-person work, influenced by cultural and political factors. Meanwhile, New York City—a dense, blue-state metropolis—has experienced a slower rebound, shaped by prolonged restrictions and a strong presence of industries like finance, law, and tech, where hybrid work remains prevalent.

Millions of workers across the country are being given RTO marching orders. But the rules are different for stars and top performers. Companies including Amazon.com, AT&T, and JPMorgan Chase have called workers back to the office five days a week recently, with bosses citing a need for collaboration and connection. Nearly 80% of 400 CEOs in a 2024 KPMG survey said they expect employees to be in offices full time within the next three years.

However, employees with unique skills and talents are often being offered more flexibility than their peers, labor researchers and recruiters say. The privilege gets extended to those with a proven record of exceeding performance quotas or whose brains and personal brands make them a hot target for competitors to poach. Sometimes it is also about seniority. In other cases, your work-from-home status depends on what team you are on. Work-from-home days once arranged with an empathetic boss have now become a privilege.

RTO policies are unquestionably having an impact on leasing trends. Many large employers, including federal agencies and major corporations like JPMorgan, have required workers to return en masse, at least in some capacity. “Innovation doesn’t just happen over Zoom. It happens at the water cooler, at the coffee pot,” says Cazana, emphasizing the importance of in-person collaboration.

While Knoxville saw an early return to the office, with occupancy beginning to increase back in Q3 2020, cities like New York faced a slower recovery. O’Brien notes that in New York, “Certain tenants are coming back, but it’s highly industry specific.” He highlights that while finance and law firms have largely resumed in-office work, technology firms remain more hesitant, prolonging a hybrid model.

Beyond increased leasing volume, tenant preferences have evolved. The traditional office lease, once a rigid long-term commitment, is being reimagined.

“Shorter lease terms? Absolutely, but only where landlords allow it,” says Cazana.

In Knoxville, landlords still hold the upper hand with occupancy rates above 90%.

“Tenants might want flexibility, but in a tight market like ours, landlords are dictating terms.”

In New York City, O’Brien sees a bifurcated approach: “There’s been a definite flight to quality. Companies that are returning are making sure they do so in Class A spaces that offer better amenities, better ventilation, and modern designs.”

The push for premium office space is also a strategy for attracting and retaining talent in an era where employees have newfound leverage over where and how they work.

The RTO wave isn’t benefiting all office properties equally. Class A buildings, particularly those with modern layouts and high-end amenities, are thriving, while older, outdated spaces struggle to attract tenants. “In Knoxville, a major employer recently moved from a 55-year-old Class B building into a brand-new Class A space because they knew they needed to entice employees back,” Cazana explains.

O’Brien echoes this sentiment in New York: “Trophy buildings are seeing an uptick in demand, but mid-tier and Class B spaces are lagging. In some cases, landlords are being forced to retrofit or repurpose buildings altogether.” He notes that the gap between high-end and lower-tier office space is widening, making it difficult for older properties to compete without significant investment.

As firms bring employees back, office layouts are also changing. The open-plan office, once heralded as the future, is now being tweaked to balance collaboration with personal space. “We’re seeing a major push towards hybrid work-friendly designs—more conference rooms, more collaborative areas, but also spaces that allow for privacy,” says O’Brien.

Cazana adds that many firms are upgrading their office furniture and common areas to enhance the employee experience. “If you want people back in the office, you must give them a reason to be there. It’s about safety, comfort, and culture,” he explains. The role of HR in office planning has grown significantly, with many companies recognizing that workplace design directly impacts retention and satisfaction.

Looking ahead, the key question is whether this office resurgence is here to stay. While RTO policies have driven leasing activity, structural shifts toward hybrid work may continue to limit demand for traditional office space. “Hybrid isn’t going away, but it’s evolving,” Cazana says. “Three to four days in the office seems to be the new norm.”

O’Brien is cautiously optimistic but acknowledges the challenges ahead.

“New York’s office market will always be resilient, but we must adapt. Some older office buildings will need to be converted to residential or mixed-use to stay viable.” He sees government incentives for such conversions as a potential game-changer in rebalancing supply and demand.

The RTO movement is undoubtedly reshaping the office market, but its long-term sustainability remains uncertain. While Class A buildings in thriving markets will continue to see demand, the broader market will need to adapt to evolving tenant expectations, hybrid work structures, and the growing importance of workplace experience. One thing is clear: the office isn’t dead—it’s just being redefined.