Remote work: Offices are losing value – employees insist on working from home

Demand for office space continues to decline sharply in Europe and the United States, where after three years of remote work due to the pandemic, workers do not want to return to the previous work system.

Despite companies’ efforts to achieve full revenue, many workers are still working remotely, and would even prefer to change jobs if pressured to do otherwise. The result is that many companies, including multinationals, have begun to realize this trend and are now starting to look for smaller office spaces either by relocating or downsizing.

Office vacancy rates have risen to new highs and investment in this space has declined sharply

This trend has already led to demand for offices in the United States and European countries such as Britain falling significantly to near its lowest levels in twenty years, while a similar situation has been recorded in Germany. It is worth noting that one in ten companies in Germany are currently reducing office space for this very reason.

Office vacancy rates rose to new highs and investment in such spaces fell sharply in the third quarter of this year compared with the same period in 2022 in London, New York and San Francisco, according to preliminary data from research firm CoStar. Specializing in commercial real estate. These figures were published by the Financial Times.

In Germany, 10% of companies plan to reduce office space in response to remote working habits, putting new pressure on the commercial real estate market that has been hit by significant increases in construction costs due to inflation and financing costs due to rising interest rates. These numbers come from an Ifo poll provided by Bloomberg. According to the data, this 10% is the average of respondents in specific industries showing much higher percentages.

Sectors that witnessed the greatest decline in demand for offices

One indication is that automakers want to reduce office space by a much greater percentage – nearly four out of ten. On the other hand, broadcasting, advertising and technology companies recorded very high percentages, according to the same numbers. The smallest percentages are recorded in trade. Only 1% of companies plan to increase their office space, according to Evo reports.

With one in four employees working from home on a permanent basis, the downward trend in office use may intensify in the coming years as long-term office leases expire and companies reassess their need for work space, the economist told the international news agency. Simon Cross.

Meanwhile, London-based real estate agency Savills reports that large companies in particular are avoiding buy-to-let deals as they are still trying to understand their space needs. This is because work patterns have changed and many want and choose to work remotely. Many companies have also adopted hybrid working which involves only partial presence of employees in office space.

There has been interest in London in ‘green’, modern and recently refurbished offices. However, the relative proportions remain well below pre-pandemic levels and significantly lower (25%) compared to last year.

Meanwhile, the same phenomenon pushed office vacancy in San Francisco to its highest level in two decades, accounting for 20% of available space in the third quarter, up from 6.3% at the start of the pandemic.

Cities like San Francisco have been particularly hard hit in terms of office space, given the high level of hybrid working and technology employment levels there, market players told the Financial Times. Workers in technology and other similar intellectually focused professions have embraced remote work more than other office workers, according to the same analysts.

source: after that