Half of Big Multinational Firms Plan to Reduce Office Space in Next three years

As the COVID-19 pandemic forced office workers to adapt to remote work, many companies around the world are expected to reduce office space in the next three years.

As the COVID-19 pandemic forced office workers to adapt to remote work, many companies around the world are expected to reduce office space in the next three years. A survey conducted by Knight Frank, a UK-based real estate consultancy, revealed that most major groups cutting office space are aiming to reduce the area by 10-20%. This trend is not being seen as a negative signal for the real estate market since supply is still short and rents for high-end buildings are increasing.

The survey showed that nearly half of the businesses are also planning to change their headquarters in the next three years, while smaller companies plan to expand their office space. While BlackRock, a US-based investment management group, asked all employees to return to the office four days a week, many other companies have opted for hybrid or fully remote work policies.

Half of Big Multinational Firms Plan to Reduce Office Space in Next three years

This shift to remote work has left many commercial real estate buildings facing challenges as large corporations continue to cut back on office space. The uncertainty over the future of older buildings and less popular locations has raised concerns about the real estate market's future with the possibility of a severe recession due to higher interest rates.

While the reduction in office space is a significant change for larger organizations, using smaller spaces could be a solution. Knight Frank believes that this trend is unlikely to fade away anytime soon, and it will be interesting to see how the commercial real estate market adapts to this change.

Moreover, a study conducted by Savills predicts that US cities such as San Francisco and Washington DC will have the most excess office space over the next decade, while the Asian market will likely tighten. The future of the commercial real estate market remains uncertain, but one thing is sure, the pandemic has changed the way we view and use office spaces, and businesses must adapt to this new reality.