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Delayed office return could further strain Wilmington businesses

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Most of Wilmington’s largest employers do not yet have plans to return the majority of their office workers, although JPMorgan Chase is among the earliest, with a Fourth of July target date. | DBT PHOTO BY SCOTT SERIO

WILMINGTON – A year ago, small businesses in the heart of the city’s downtown fretted about the impact of not having most office workers in town through the summer.

A year later, they’re faced with potentially doing it again.

Although Gov. John Carney lifted indoor mask and social distancing restrictions for those vaccinated in Delaware in May, most of Wilmington’s largest employers told Delaware Business Times that they don’t plan on sending the majority, or any, of their office workers back to the city this summer.

Only JPMorgan Chase plans to have its entire workforce back at desks at least part of the time this summer, starting with a rotational schedule around the Fourth of July. The state’s largest for-profit employer began bringing large numbers of office workers back to Wilmington area offices in May and has eased its mask and social distancing policies for those vaccinated.

Even so, Chase will not be seeing pre-pandemic office capacity levels for quite some time, and it has one of the most ambitious return-to-office plans.

Capital One is explicitly targeting Labor Day as a turning point while TD Bank and Barclays Bank have no timeline yet. Bank of America is targeting a phased return to offices around September while PNC Bank is looking for a full return this fall.

Chemours anticipates raising its capacity limits to 40% of occupancy in early July and 75% in August, but for now is continuing voluntary office hours under a hybrid working model. AAA Club Alliance is reopening its Riverfront offices July 6, although some will continue working remotely or utilizing a hybrid schedule.

All told, the cautious approach by the skyline-dominating corporate employers in Wilmington mean that city businesses could be in for another summer with drastically fewer office workers during the weeks ahead.

M&T plans ahead

Like most major employers, Buffalo, N.Y.-based M&T Bank has been discussing for months how to begin returning employees to offices, including in Wilmington where it has a major foothold.

Robert Sorantino, an HR business partner at M&T Bank, said the bank has begun a phased re-entry to four of its largest offices around the country. He’s leading the plan at Wilmington Center, where the first phase saw 54 employees volunteer to return to their offices beginning in May for at least one day each week.

“Our consistent theme from the very beginning and never deviated from it is that the health and safety of our employees and customers is our No. 1 priority,” he said.

While a step toward normalcy, those numbers will mean that only about 15% of the massive office building’s workforce will be back at desks though. Sorantino said that M&T expects to continue doing additional volunteer return phases for employees, including at other buildings, but won’t reassess the entire workforce’s plans until September.

According to monthly employee polling, Sorantino said the number of bank employees who reported being vaccinated has increased dramatically through the spring.

“That probably makes people feel safe about returning,” he said, noting that employees are also encouraged by seeing their colleagues volunteer to come back. “That’s been a real positive message.”

With office workers largely being kept remote this summer, Wilmington’s small businesses could once again feel the pinch as another summer passes with diminished sales. | DBT PHOTO BY JACOB OWENS

City businesses wait

For the dozens of restaurants that cater corporate lunches and serve courthouse juries, the past year has been a struggle to survive with greatly diminished sales.

Tim Pawliczek, owner of Cavanaugh’s on Market Street, has focused on those sales for his primary book of business for years, but they largely dried up last year. He obtained federal loans and grants to help tide over his cash flows, and he benefits from owning his property, but he still faced challenges.

After waiting out the pandemic for six months, Pawliczek, who has run his own business for 30 years, began working nights at Fedex.

“At the end of the day, I came to realize that it wasn’t about the money, it got me out of my head,” he said, noting that he’s never had such idle time in his career.

With juries back in courthouses and some workers returning to offices, Pawliczek has primarily returned to Cavanaugh’s to meet rising demand, but he’s facing hiring challenges now.

“The worst thing in the world is having business and not being able to handle it,” he said, noting his staff is stretched thin right now with positions to fill.

Jed Hatfield, president of Colonial Parking, the city’s largest private parking garage manager with some 9,000 spaces, said they saw some modest movement toward an office return.

A large portion of Colonial’s customers rent parking spaces monthly for use while working downtown and that business largely dried up. Some of the large corporate users that contract for blocks of spaces gave them up last year, and are still waiting to sign back, Hatfield said.

“The last year has been extraordinarily challenging. For us, it wasn’t a soft reduction, it was boom, people stopped coming to town,” he said.

Colonial has tried to be creative, devising a Flex Pass that charges users based on days utilized rather than a flat monthly fee.

“We’ve tried to anticipate what the new world will look like and serve it the best we can,” Hatfield said.

What is the new normal?

For many around the city, what Wilmington’s central business district looks like after a full-scale return to offices remains to be seen. Many employers are privately looking at what roles need to be in-office daily versus which could be completed remotely.

Sorantino said that M&T expects to complete a review of its positions for suitability of remote or hybrid schedules by the September goal.

Meanwhile, there are already some signs that the city may see some reduction in total workers due to the remote-working effect. Outside of the city, several major employers have begun exiting offices and putting the space up for sublease, a sign that remote working may be growing.

Health care system Nemours gave back 42,210 square feet at the Applied Bank Center high-rise off Concord Pike. Farmers Insurance listed its entire 210,000-square-foot office near the Pennsylvania border for sublease while Cigna is listing 30,000 square feet at its Bellevue Corporate Center offices as well. In total, available sublease space measured 468,702 square feet at the end of the first quarter – the highest total recorded since 2010.

AAA Club Alliance also recently announced that it is moving 700 call center jobs in Newark and Hamilton, N.J., to fully remote positions, although the brick-and-mortar locations will reportedly continue to operate.

For Hatfield, of Colonial Parking, what Wilmington looks like after the return to offices is the biggest outstanding question.

“The big question is going to be, come Labor Day, ‘What does the new normal look like?’ I suspect it’s still not going to be everybody five days a week,” he said.

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