Half of the largest international employers are planning to cut their office space in the next three years, according to a survey, as they struggle to manage the complex nature of the post-Covid workplace.
The survey of 350 businesses by property consultants Knight Frank and commercial real estate firm Cresa found that 50% the largest businesses they questioned – those with more than 50,000 employees – expect to shrink their global workspaces, although most are only planning to reduce by between 10% and 20%.
However, this contrasts with the expectations of smaller firms surveyed – those with up to 10,000 employees – just over half of whom said they were expecting to increase their global office space.
The planned moves come as the vast majority of firms have chosen office-centric working patterns following the pandemic, with more than half favouring a hybrid model, where employees split their time between their desks and home or another remote location.
However, almost a third of businesses surveyed said they were promoting an “office first” or “office only” approach. Just 12% of companies are planning for their teams to work fully flexibly, meaning staff would work predominantly or entirely remotely.
As a result, the majority of firms expect managing their workplace to become more or much more complex over the next three years, as they try to balance office and remote working, while meeting other demands.
The Knight Frank Cresa survey, which questioned businesses collectively employing more than 10 million people, highlighted the number of office moves expected in the coming years.
The desire to find the right corporate headquarters is a key motivator for many organisations, the survey found, as companies look to implement their post-Covid ways of working, while also providing more amenities for their staff and hitting their sustainability targets.
Nearly half of businesses said they planned to replace their corporate HQ within the next three years, up on 40% in 2021.
Lee Elliott, the global head of occupier research at Knight Frank, said: “Now that we are in a truly post-pandemic world, corporate decision-makers are ‘removing the blinkers’ and making clear decisions around their future corporate real estate strategy based on a broader array of business issues than just the pandemic.”
He added: “Firms are looking to work their offices harder, but still offer some flexibility to staff.”
Whether taking on more of less office space, or looking for a new headquarters, organisations are planning to move into different buildings and will mostly be looking for better quality office space when they do. This is leading to increased demand for higher quality and more sustainable office space around the world.
Tim Armstrong, the global head of occupier strategy and solutions at Knight Frank, said many businesses realised they needed to adapt their workplaces to suit a more flexible working environment.
“Many occupiers will conclude that their current office buildings cannot meet their requirements,” Armstrong said.
“A rise in both the functional and physical obsolescence of buildings will drive occupiers to higher quality, more sustainable and amenity-rich space, but the supply of this space is coming under increasing pressure in global markets.”
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Half of big international firms to cut office space in next three years