Office landlords, beware: More of corporate America is looking to reduce space

An analysis of earnings calls found that 25 big companies are planning to shed offices

TRD NATIONAL /
Jul.July 23, 2020 01:00 PM
An analysis found that more than 25 large companies across different sectors are planning to downsize their office footprint (iStock)

An analysis found that more than 25 large companies across different sectors are planning to downsize their office footprint (iStock)

It’s not just tech firms. Corporate America is looking to trim office space as companies shift to remote work and look to reduce costs.

An analysis of quarterly earnings calls by Reuters found that more than 25 large companies across different sectors are planning to downsize their office footprint, posing a threat to office landlords’ bottom lines.

Ronald Philip O’Hanley, CEO of financial services company State Street, said on his company’s earnings call last week that observers “should expect and hold us to a much lower footprint really starting quite soon.”

Regions Financial Corp. said it was “confident overall office square footage will continue to decline.”

After the pandemic triggered state shutdowns in March, workers across the country transitioned to working from home, which many companies have reported to be a largely positive experience.

Though some in the real estate industry have questioned how longlasting the shift will be, in recent months, Twitter, Facebook and Mastercard have all announced permanent moves toward remote work.

A recent survey showed that 40 percent of bank executives planned to cut back on real estate holdings.

In June, Morgan Stanley forecasted that remote work will increase vacancy rates in office buildings going forward. Vacancy rates are expected to reach 10 to 12 percent in New York in the next two to five years — up from 8.7 percent now. [Reuters] — Sylvia Varnham O’Regan


Related Articles

arrow_forward_ios
Homebuyers have flocked to Bronzeville (Credit: Google Maps)

Chicago homebuyers head to Bronzeville for more space

Chicago homebuyers head to Bronzeville for more space
Brian Whiting, CEO of Telos Group, and the Old Post Office (Credit: Google Maps)

Lonely at the top: 601W Cos. opens Old Post Office rooftop park in WFH world

Lonely at the top: 601W Cos. opens Old Post Office rooftop park in WFH world
Deutsche Finance America managing partner Jason Lucas and Michael Shvo, with 333 South Wabash

What tenants are paying at Shvo and Deutsche Finance’s “Big Red” building

What tenants are paying at Shvo and Deutsche Finance’s “Big Red” building
Mayor Lori Lightfoot (Getty, iStock)

Developers wanted: Chicago looks to transform struggling commercial districts

Developers wanted: Chicago looks to transform struggling commercial districts
Chicago mayor Lori Lightfoot and boarded up stores along Michigan Avenue (Credit: Jonathan Daniel/Getty Images, and Scott Olson/Getty Images)

Chicago’s $100M small biz loan fund has only distributed $17M

Chicago’s $100M small biz loan fund has only distributed $17M
Sandeep Mathrani, 1155 W. Fulton and 1114 W. Fulton (Credit: Google Maps and John Sciulli/Getty Images for Bloomingdale's)

Exit strategy: WeWork eats Fulton Market leases

Exit strategy: WeWork eats Fulton Market leases
Cook County Sheriff Tom Dart urged Gov. J.B. Pritzker to extend the eviction moratorium, which is set to expire on Aug. 22. (Dart by by Scott Olson/Getty Images; iStock; Wikipedia Commons)

250K Cook County households face eviction when ban expires, sheriff warns

250K Cook County households face eviction when ban expires, sheriff warns
Optima CEO David Hovey Sr. and 220 E. Illinois Street (Hovey via Optima; Google Maps)

Chicago developer converts space into “Pandemic pod” classrooms

Chicago developer converts space into “Pandemic pod” classrooms
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...