Hybrid work strategies have helped many employers improve employee satisfaction and retention, but CBRE is warning that these arrangements can create unintended exposure for companies tied to state and local economic incentive programs.
In a recent report, CBRE noted that hybrid work has spread rapidly while many incentive agreements are still governed by rules written before 2020. As a result, companies that shifted to flexible or remote work may now be navigating a fragmented compliance environment where temporary pandemic relief has lapsed, state-level guidance may clash with local mandates, and legacy definitions of qualifying jobs do not always reflect current workplace norms.
CBRE highlighted that public-sector requirements for hybrid work vary widely. Some jurisdictions have introduced explicit on-site attendance thresholds, while others have not, and the report observed that mandated physical presence can range from 0% to nearly 60% of a standard work week. This dispersion increases the risk that employers relying on economic development incentives may not be meeting the conditions needed to maintain benefits.
Companies that fall out of compliance can face meaningful consequences, including the loss of incentives, financial penalties, or breaches of multi-year employment commitments written into their agreements. The report underscored that these risks are particularly acute when organizations continue to operate under assumptions from temporary pandemic allowances that have since expired, in some cases without formal notice.
CBRE identified three recurring areas of compliance risk. First, many jurisdictions rolled back pandemic-era relief measures, leaving firms that still rely on those flexibilities potentially exposed to findings of retroactive non-compliance. Second, rules around qualifying positions can apply not only to new hires but also to retained roles, meaning that existing remote employees cannot simply be grandfathered into meeting new on-site attendance thresholds. Third, a material drop in on-site headcount can reduce the number of eligible jobs a company can claim, which may trigger credit reductions, clawbacks, or other penalties connected to long-term retention obligations.
The report advised that incentive considerations should be integrated into corporate real estate and site selection decisions from the outset. Hybrid workforce strategies and attendance expectations can directly influence whether a job meets a jurisdiction’s qualifying criteria, even when state or local programs appear generous at first glance. Misalignment between workforce models and program definitions can lead to compliance challenges well after a location decision has been made.
To mitigate these risks, CBRE suggested that corporations screen incentive programs against projected workforce models before committing to a site, proactively audit existing incentive agreements to identify potential gaps, and pursue renegotiations with economic development agencies when conflicts emerge. According to the report, agencies often prefer to update terms rather than pursue clawbacks when businesses demonstrate continued investment and a good-faith effort to comply.
For occupiers and their advisors, the message is that hybrid work is now a fundamental structural consideration in incentive negotiations, not an operational detail to be addressed after the fact.
