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.
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