Israel's post-COVID Market Lets Workers Return to the Office, but Many Are Saying 'No Thanks'

Israeli office occupancy, especially in high-tech, remains low despite the economy’s reopening, as work-from-home becomes newest job perk

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Empty Israeli offices during the pandemic.
Empty Israeli offices during the pandemic.Credit: Adi Cohen

It’s an early weekday afternoon at the Byte restaurant in the business district of a Tel Aviv suburb. In normal times, it would be the peak lunchtime hour, but last week most of the tables were empty and few people were coming in for takeout.

“Since Passover and the vaccination campaign, the lunchtime traffic from the Ra’anana Employment Center has come back to a degree, but you can’t begin to compare it to what it was before the coronavirus. We used to serve 200-300 workers every day in the afternoon, now maybe 25% have come back,” said Andreas, a Byte partner.

Still, he is better off than most of his competitors, who didn’t survive a year of coronavirus lockdowns and remote work. “We survived that time by expanding delivery and online,” Andreas said. “Still, if a lot more people don’t start coming back to their offices to work by the end of the year and we start to approach where we were before COVID, we’ll also be forced to close.”

The empty tables aren’t the only evidence of the change wrought by the coronavirus on the Israeli workplace. The Ra’anana Business Center’s parking garage is half empty and few pedestrians are on the surrounding plaza, even though the complex counts as tenants some of the biggest employers of Israeli high-tech – Nice, SAP, Mellanox and Cyber-Byte.

“Some of the companies here have come back completely, or at least are talking about it, but 70% of the workers here are still working from home,” estimated Gadi, a security guard at the entrance to one of the buildings.

At a time when Israel is taking off its masks (at least out of doors), dining out and going to school, the life of office workers still doesn’t feature its pre-coronavirus practices and instead is taking on a new shape.

Surveys show that office occupancy rates have risen to relatively high levels, but the reality is that the number of workers going back to their cubicles and desks is much lower.

In central Tel Aviv, which is characterized by traditionally strong demand and high rents, office parking garages look about as full as ever. However, the further you go from Tel Aviv, the gap between the survey figures and the situation on the ground grows wider.

In some cases, that reflects a slow return to the pre-COVID normal while employers prepare their workplaces to meet Purple Badge standards for social distancing and the like.

For example, figures from the Natam Group, a property-services company, the office occupancy rate as measured by rental contracts in force in Ra’anana was 71% in the second half of 2020. That is down sharply from 88% in the first of last year. But in practice, even today, no more than 40% of workers at the Ra’anana complex come to the office.

Tel Aviv doing better

At Tel Aviv’s Ramat Hahayal and the Herzliya Pituach office centers that were also examined by TheMarker, the human traffic was stronger. The Natam survey said occupancy based on rental contracts was 83% and 95%, respectively. But from interviews with business wonders, security guards and parking garage attendants, the number of workers coming in every day doesn’t exceed 70%.

“The difficulty of finding parking in the last several days testifies that people are coming back to their offices, and it’s still nothing compared to before the coronavirus,” said an employee of a Herzliya Pituach gaming company. His company is letting staff work at home just one day a week.

That’s a problem for Kfir and his partners, who opened their restaurant Kubbeh Gutte in the heart of the Herzliya Pituach business center last June. It took close to a year before customers began coming in large numbers.

“During Passover, people started to return to the offices and we’re feeling the traffic on the street and in the restaurant, but it’s maybe 70% of what it was before the coronavirus and what we’d expected when we started the business,” he said.

“Under these conditions, it’s not financially viable to operate in a place like this. If we didn’t have delivery, we would have closed like several other businesses here have,” said Kfir.

The Purple Badge rules, which for example limit the number of people who can be in an elevator at any one time to half the normal number, aren’t being enforced, say employers and office building owners. One reason is that there’s no one monitoring for infractions.

“Except for people wearing masks when they take an elevator with people not from their own office, everyone behaves as usual. Before the vaccination campaign, people were a little more careful about keeping distances, but today even that has stopped,” said an employee of one of the high-tech companies in Herzliya Pituach.

A manager at a building-management company admits there’s no enforcement.

“We have no way of checking people’s Green Passes, but it seems that in the offices themselves they’re enforcing mask-wearing, at least in common areas,” He said. “As far as the elevators go, there’s nothing we can do. We hung notices on every floor reminding workers that only three people are allowed at a time in an elevator. If more go in, we have no control over it.”

In any case, employees and employers agree that COVID restrictions aren’t the only reason workers haven’t returned. “Anyone who wants to can come back. But most people have gotten used to COVID work practices and aren’t returning to a full week [at the office],” said an employee at the tech company IronSource, who asked not to be identified.

Many multinational employers in high-tech enforce the same coronavirus rules all around the world, even though many of the precautions are no longer relevant in Israel, where high vaccination rates have enabled most business functions to return to normal.

At Google, for instance, employees are not due to return to the office until September, even though in Israel the government is allowing them to return now. In the meantime, Google Israel employees have adopted their own practice of coming into the office at most one or two days a week and working at home the rest of the time.

Office occupancy, employees told TheMarker, is about 30% on any given day. Many workers are demanding they be allowed to continue working from home at least two days a week.

Microsoft, which was one of the first companies globally to let staff work at home in March 2020, is bringing employees back gradually, as it adapts workplaces to the Purple Badge standard.

“Microsoft research and development is using the hybrid model, which mixes work from home and the office, in a way that is adjusted personally to the needs of the worker and the organization,” the company said.

The U.S. company recently opened a 700 million shekel ($215 million) facility in Herzliya Pituach with the kind of creature comforts that should lure employees to the office. They include a giant fitness center, yoga and music rooms and a community garden, children and baby rooms and even a kennel for dogs.

In the pre-COVID market, perks like these were a way of competing for the best employees. In the post-COVID, market companies are trying to win over employees and hirees by not creating obstacles to working from home.

Hybrid in demand

“We’re seeing this in our recruiting talks. The option of working hybrid made employers more attractive,” said Nirit Schneider, head of purchasing and facilities at Check Point.

At Check Point Software Technologies, employees can pick one of two tracks – a fixed desk at the office or a hot desk they are given on the days they choose to come on. She said 80% of Check Point employees choose to work most of the week at home.

High-tech companies in Israel want to keep their employees happy after a difficult year,” said one recruiter. “If one morning a company decides to make employees come back to the office and sit for two hours in traffic, well, that isn’t the smartest way to retain staff.”

She said many companies are exploring the hybrid model, but don’t yet know now to implement it. They are undertaking pilot programs and waiting to see how they succeed.

“When everyone is inoculated, more will go to the office, but high-tech companies fear going back to that and arousing opposition from their employees,” the recruiter said. “Myself, I’ve waited to return to the office, and I’m not willing to give up on working at home two days a week.”

One exemption to the rule is government employees, who have returned to their offices in much larger numbers, even though the civil service is still officially operating on a “medical emergency” basis. Today, at most government offices about three-quarters of employees are working at their desks. The Civil Service Commission said that it would soon drop all restrictions to working in the office and issue rules on working from home.

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