With fewer in-person workdays, many companies have reduced their office space, while upgrading to facilities with amenities that help motivate employees to come in. New research from CBRE, the commercial real-estate services company, suggests that office-space contraction is at least slowing, even as many employers require more desk-sharing by employees. Here are some of the most important takeaways for companies and workers from CBRE’s new survey of 225 corporate real-estate executives and our conversation with Julie Whelan, the company’s global head of occupier thought leadership:
- Smaller companies are driving office leasing, even as large firms continue to downsize. The number of leasing transactions is on par with where it was before the pandemic, largely driven by activity among organizations with fewer than 10,000 employees, according Whelan. The total square footage leased is still down, however, as these companies operate on a smaller scale. Overall, 38% of businesses expect to expand their office space over the next three years, up from 20% last year, with 37% of companies expecting to reduce their space over that time-frame, down from 53% last year.
- Companies are leasing less conference room space and relying more on building amenity floors or shared meeting space providers like Convene that they can spill over into if needed. Over half of corporate real estate executives consider shared building meeting space a desirable amenity, according to the CBRE survey. As a result, some landlords are using credits for shared meeting space use as an incentive to sign a lease. “I talked to one landlord in New York who said, ‘For years we only looked at concessions as free rent or tenant improvement allowances. But now with all the amenities that we’re expected to have in the building, you can offer these amenities as concessions by giving packages of time to be used in these spaces,’” says Whelan. “By having a concession of amenity packages, all of a sudden you have another lever to pull as a landlord.”
- Desk sharing is becoming even more common. Already, 60% of employers surveyed don’t have a dedicated desk for every employee and CBRE forecasts that will increase to almost 70% in two years. In the tech industry, there are 1.7 employees to each desk, with that predicted to rise to 2.1 in 2026. Financial services has 1.6 workers per desk, forecast to hit 1.8 in two years.
- The “hub-and-spoke” office model discussed during the pandemic is “100% not where the world is going,” says Whelan. Employers are reducing the number of dispersed office locations in favor of a return to a centralized, urban office strategy. “When you think about it, the reason for the office is largely to have people together,” says Whelan. “The less centralized your space, the more difficult it’s going to be to get people together.”
- The experience en route to and from the office matters a lot to employees. Access to food and beverage options, public transportation, and car parking were the three most desirable amenities among the corporate real estate executives in the CBRE survey. “When an employee is coming into the city or taking a commute to go into the office…they want to come into a great place,” says Whelan. “It just doesn’t mean once you get into that leased space with all the bells and whistles that the company is responsible for, but it’s that journey right from your front door to the front door of the office.”
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