Firms to Shrink Office Space Even as More Require In-Person Work: CBRE
By Celia Young May 19, 2023 2:48 pm
reprints
More than half of companies with U.S. offices expect their footprint to shrink in the next three years, even as 65 percent of firms now require some in-person work, according to a survey from CBRE.
Employers with more than 10,000 staffers are driving the downsizing, with 68 percent expecting to shrink their office portfolios in the next three years, compared to just 36 percent of companies with under 1,000 employees that plan to do so, according to the CBRE (CBRE) survey of 207 executives between February and April.
While 32 percent of the executives said they planned to move their offices to better-quality space, 40 percent intended to use the office market downturn as leverage to renegotiate their existing leases.
“Real estate evolves to accommodate changes in human behavior, and we’re seeing that as the office market adapts to hybrid work,” Manish Kashyap, CBRE’s global president of advisory and transaction services, said in a statement. “This means greater flexibility in lease terms [and] more occupiers gravitating to higher-quality office space.”
It also means greater flexibility for office employees. Of the 60 percent of firms requiring some in-person work, only 57 percent are keeping track of whether their staffers actually show up, as businesses try to prevent resignations in a tight labor market, according to the report.
Technology firms were the most lenient when it came to remote work, with 41 percent of tech executives reporting that in-person work was completely voluntary and only 26 percent requiring employees to come in more than 2.5 days a week.
In the financial and professional services sector, that dynamic was flipped, in part thanks to greater “economic uncertainty” and a potential recession, Julie Whelan, CBRE’s global head of occupier research, said in a statement. About 48 percent of financial and professional services executives expected workers to be at their desks more than 2.5 days a week compared to the 25 percent that allowed completely voluntary working schedules.
But those executives were split on how economic uncertainty would impact hybrid work. Roughly 45 percent of those surveyed thought a potential recession wouldn’t change working habits at all, while 40 percent believed it would encourage in-person work. Just 15 percent thought a tough economic climate would lead to less office work, according to the report.
Celia Young can be reached at cyoung@commercialobserver.com.
