CBRE report: Now your office space is starting to shrink

Even if, after the pandemic, companies today have become adept at spatial planning and making their office spaces more efficient, hybrid work across a broad global crest has created humps of unused offices and empty workspaces.

The companies' underutilization of their office spaces suggests that employee attendance at their workplaces is decreasing, the recent CBRE report 'The 2023–2024 CBRE Global Workplace & Occupancy Insights' concludes.

This imbalance will not be resolved without well-communicated changes to corporate hybrid policies, more reductions in portfolio size or improvements to the workplace experience that attract employees to the office, CBRE states.

The report, based on 66 global clients across 5,808 buildings representing almost 350 million ft² of space, among other things, focuses on the hybrid work of office employees and their needs for physical office space.

Reductions

In the past three years, hybrid working has led tenants to reduce their office space to achieve greater efficiency. The average square footage per person fell 22% in 2023, CBRE reports.

62% of the survey respondents indicate that they have reduced their office space since 2020, and 63% expect to make further reductions up to 2026.

In 2023, the average square footage per person fell 22%, The 2023-24 CBRE Global Workplace & Occupancy Insights´ reports.                                                Photos: iStock

According to the CBRE report, larger companies and organizations that have not significantly reduced space in the past three years are planning more extensive reductions shortly.

Just 29% of the respondents say they expect to expand their portfolio within the next three years. Of companies that plan to optimize their portfolios, 82% say they want to upgrade the utilization of their workstations. 

Underutilization

Several companies seem to use their office spaces and areas in the same way as they did before the coronavirus pandemic.

Before they start rethinking or adapting their outdated office environments and furnishings to support today's modern workflows, they will continue to struggle with low office utilization.

Before companies begin to rethink or adapt their outdated workspaces and office furnishings to support modern workflows, they will continuously struggle with low office utilization.

Office providers and companies should focus on office space management software that can measure employee flow via sensors and network activity and reduce occupancy costs by dynamically managing office space, the CBRE survey suggests.

The report predicts that companies should create scorecards combining office user data with HR, finance and IT to measure the workplace impact on employee performance, operational priorities, and financial and ESG targets.

Office death

Nearly 20% of office space in major US cities was vacant in the fourth quarter of 2023, up from 18.8% a year earlier. By comparison, the vacancy rate at the end of 2019, before the outbreak of the pandemic, was down to 12.1.

Commercial leasing experts openly fear that the office employees´ increasing hybrid working could impact global office leasing just as dramatically as the retail death online shopping has caused in the world´s city streets. 

CRE experts now fear that the office employees´ increasing hybrid working could impact global office leasing just as dramatically as the retail death online shopping has caused in the world´s city streets.

Not since 1979 have the American rental markets experienced stronger office vacancies than they are currently witnessing in America's largest cities.

The current hybrid revolution does not bear all the blame - massive speculation and overbuilding of office properties in the USA in the 80s and 90s also contributed strongly to the current drastic downturn, which is also spreading in Europe and Asia, albeit on a smaller scale for the time being.  ●
 

Read more:
Hrdive.com: Organizations plan to cut, optimize space to accommodate hybrid work
Cnn.com: Empty office buildings may meet the same fate as zombie shopping malls
Aiforwork.co: Create an office space utilization report with ChatGPT
Robinpowered.com: 5 factors leading to underutilized office space