Remote work: Offices are closing as everyone prefers to work from home

Offices in Europe and the USA are closing en masse because their employees… do not return, preferring to work from home.

Demand for office space continues to decline sharply in Europe and the United States as workers, after three years of remote work due to the pandemic, are reluctant to return to their previous work patterns.

Despite companies’ efforts to ensure full productivity, many workers still work remotely, even preferring to change jobs if they are forced to do otherwise. As a result, many companies, including multinationals, are aware of this trend and are now starting to look for smaller office space, or even move from an entire building to a single room.

Office vacancy rates have risen to new highs, while investment in office space has plummeted. This trend is already causing demand for offices in the US and European countries such as the UK to decline significantly and approach a twenty-year low. A similar situation was recorded in Germany. It is significant that every tenth company in Germany is now actively reducing office space precisely for this reason.

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Office vacancy rates hit new highs and office investment fell sharply in the third quarter of this year compared with the same period in 2022, according to preliminary data from research firm CoStar. A similar situation is observed in London, New York and San Francisco, writes the Financial Times.

In Germany, 10% of companies plan to reduce office space in response to the work-from-home habit, putting new pressure on the commercial real estate market, which has been hit by significant increases in construction costs due to inflation and financing costs due to high interest rates. These figures are taken from a study by the Ifo Institute, presented by Bloomberg. According to the data, 10% is the average of respondents from specific industries, which showed a much higher percentage.

It is significant that automakers want to reduce office space in a much larger proportion – almost four out of ten. Accordingly, according to the same data, a very high percentage falls on television and radio companies, advertising and technology companies. The lowest percentages were recorded in trade. But only 1% of companies plan increase your office spacereports Ifo.

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Because the every fourth employee works from home full-timeThe downward trend in office use could accelerate in coming years as long-term office leases expire and companies reassess their need for workspace, economist Simon Crouse told international news agency.

At the same time, London real estate agency Savills reports that large companies, in particular avoid purchase and sale transactions with the possibility of leasing, as they are still trying to understand their space requirements. This is due to the fact that work models have changed, many want and prefer to work remotely. In addition, many companies have switched to hybrid workwhich assumes only partial presence of employees in office premises.

In London there is an interest in “green” (ecological), modern and recently renovated offices. However, even so, relative percentages remain much lower than before the pandemic and significantly lower (25%) compared to last year.

At the same time, the phenomenon has pushed San Francisco office vacancies to a two-decade high, accounting for 20% of available space in the third quarter, up from 6.3% at the start of the pandemic.

Cities such as San Francisco have been particularly hard hit in terms of office space, given high levels of hybrid work and tech employment, market participants told the FT.

Workers in the IT sector and other similar intellectual professions, according to the same analysts, have mostly switched to remote work.

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