Could Return-to-Office Mandates Boost Valuations?

Gone are the days when you could walk around a large urban downtown core and have the sidewalk to yourself. With an increasing number of companies mandating employees back to the office for four and, in some cases, five days a week, city centres worldwide are coming back to life.

Returning to in-person work will have implications for people’s lifestyles, with more time spent commuting and planning logistics for after-school pickup. But beyond personal routines, it may also affect a wide range of investments, from real estate investment trusts to publicly listed businesses that service workers, like restaurants and shops, as well as companies mandating staff back to the office.

In Canada, the impact could be greater than elsewhere, given that Canadian workers work more hours remotely than workers in any other country.¹ This is, in part, because of a stronger preference for work-life balance. “Canada has the furthest to go as people return to the office,” says Victor Couture, an Associate Professor of Economic Analysis and Policy at the University of Toronto’s Rotman School of Management. “There will be some sort of impact, definitely.”

What that impact will be is still an open question, says Couture. The first wave of return to work – when people went from fully remote work to two and three days a week in the office – had a smaller effect on markets than expected, he explains. The reason for the muted response is partly because other economic issues, such as rising inflation and higher interest rates, blunted the potential for gains, he adds.

But could that change if in-office policies climb to five days a week? “The first wave of return-to-office was smaller than expected and so failed to reward investors, but a second wave, even if (it’s a smaller change from three days to four or five), could possibly lift valuations,” he says, because valuations of some investments, particularly real estate investment trusts (REITs), are trading are near historic lows.²

For investors, now may be the time to consider who might benefit from a return to work and who may not. We break it down.

Office Buildings

The most obvious beneficiary of return-to-work mandates is the office spaces themselves. Vacancy rates climbed during the pandemic as people worked from home, but they’ve stayed relatively high ever since, partly because buildings continued to be built. That’s changed. In a recent report, CBRE Group said that “construction has stalled,”³ noting that the second quarter of 2025 marked one year of “no starts and two years since any meaningful projects have commenced.”

Colliers, in its Q2 2025 National Market Snapshot, said that office vacancy rates are flat year-over-year, something that hasn’t happened since the start of COVID.⁴ With fewer buildings in the pipeline, and the potential for more people in the office, “new inventory may be in higher demand over the long term,” the company writes in its report.

Couture adds that the return-to-office push could be a positive driver for real estate. In the first wave, Class A buildings – top-tier real estate – did well, he says, increasing rents and occupancy rates, but it didn’t help investors who owned real estate investment trusts because many of these companies also own lower-quality space. Now, though, it’s those lower-quality properties that could start to receive more interest, potentially pushing the REIT sector higher.

It’s possible that you’ll see “owners of more distressed office assets and classes start breathing a sigh of relief,” says Couture. “So that's going to affect them directly, and even an increase of a few percentage points to the in-office rate will have a substantial impact on their balance sheet.”

Increasing foot traffic

Restaurants, particularly quick-serve spots that thrive on morning coffees and lunches, and stores located near workspaces, may also be hoping that fuller office towers will boost their bottom lines. But this sector has more work to do to recover from the shift to remote work.

In the Journal of Urban Studies, researchers at the University of Western Ontario found that restaurants experienced a much higher rate of failure during the pandemic than other sectors. The hardest hit were establishments concentrated in entertainment districts and offices.⁵

As the researchers noted, “The loss of daytime foot traffic due to remote work, and the physical manifestation of serious social and health issues in downtowns, has likely stunted the recovery of existing businesses that have survived the pandemic and driven away potential new businesses from opening.”

Could a return to work change that? The authors of the report say time will tell, though some of the world’s largest restaurant chains see the return of commuters as a potential sales driver.⁶ A study done by Revenue Management Solutions (RMS) in 2023⁷ underscores why chains are optimistic for a rebound; it found that 22 per cent of hybrid workers were dining out at fast food restaurants more than before the pandemic. Not only that, workers returning to the office were spending 8 per cent more than they did before the pandemic, compared to a drop of 21 per cent for remote workers.

A columnist in QSR, a publication that caters to the fast-food industry, suggests that the higher sales could be due to people using their in-person days to connect with coworkers at lunch or because they’ve fallen out of the meal prep routine at home.⁸

Of course, when investing, it’s often a helpful to look at more than just a single catalyst. While increased foot traffic might create the opportunity for more sales for fast-food companies, investors may want to weigh that against the potential threat of high inflation, which can squeeze consumers’ budgets – particularly spending on eating out.

Will return-to-office mandates boost productivity?

If there’s one area that may not benefit from return-to-work, it’s the companies bringing people back to the office. While many organizations think that having more people together will enhance collaboration and increase productivity, research has shown that this is not necessarily the case.

A study from the University of Pittsburgh⁹ examined data from 137 S&P 500-listed companies and found that the ones with return-to-office mandates saw no significant improvement in financial performance. However, they did result in lower employee satisfaction.

“What you would hope for is a rise in productivity when people work together, which would help companies and the economy, but the academic research on that is fairly ambiguous,” says Couture. “Work from home has been more productive than people thought.”

Still, he thinks there could be longer-term benefits of people returning to the office, such as networking with others, which could help younger employees get promoted and grow in their careers. This could in turn affect productivity in the future.

No matter what the research says, though, many people will be returning to the office whether they want to or not. For investors, it’s worth examining the areas that may benefit – such as REITs and surrounding restaurants – but these may not be as easy a win as they might seem.

According to Couture, the REIT sector might still have room to grow as a result of a return to office, but the potential for growth in other industries is less sure. “A lot of the big return to office has already happened outside of real estate, so it’s not clear yet how large this will be,” Couture says.

Sources
^1. _{Stanford Institute for Economic Policy Research, "Working from Home in 2025: Five Key Facts", April 2025}
^2. _{BNN Bloomberg, "REITs poised to gain this year amid 'decade-long' valuation discounts: Hazelview", January 2025}
^3. _{CBRE, "Canada Office Figures Q2 2025", July 2025}
^4. _{Colliers Canada, "National Market Snapshot: Q2 2025", 2025}
^5. _{Journal of Urban Studies, "Restaurant survival during the COVID-19 pandemic: Examining operational, demographic and land use predictors in London, Canada", April 2025}
^6. _{Restaurant Business, "What restaurant operators need to know about the growing return-to-office trend", July 2025}
^7. _{Revenue Management Solutions, "Restaurant Trends: July 2023", 2023}
^8. _{QSR, "Could Hybrid Workers Prove a Traffic Source for Fast-Food Restaurants?", October 2024}
^9. _{University of Pittsburgh, "Return to Office Mandates Don't Improve Employee or Company Performance", June 2025}