Will More Companies Rethink Their Office Space

Will More Companies Rethink Their Office Space?

David Randall has an interesting report in Reuters, Who still needs the office? U.S. companies start cutting space, on how more and more companies are considering reducing their office space. This will definitely end up having an impact on real estate investors and potentially could lead to the growth of rural areas. Below are a couple highlights from the article which really stood out.

  • Corporate America is downsizing its real estate footprint as companies allow more employees to work from home, a growing threat to the bottom line of owners of traditional office buildings and a sign that companies are looking for ways to cut costs as a result of the coronavirus pandemic.
  • A Reuters analysis of quarterly earnings calls over the past week revealed more than 25 large companies plan to reduce their office space in the year ahead, a move designed to reduce the second-largest expense after payrolls at corporations.
  • Green Street Advisors expects that office demand will be reduced by up to 15% as a result of work from home policies once the coronavirus pandemic is contained.

One additional item mentioned in the article was the movement of people away from coastal cities and toward more open areas including the Sun Belt. While we definitely see migrations taking place, the actual time-frame may be slower than some experts are predicting. In many cases, we see the suburbs and rural areas around major East Coast cities growing in popularity as people are continuing to work from home but have some obligations which will require city office space.

This trend may change as companies move from city office space to suburban office buildings and corporate complexes. Suburban offices could see increased demand as companies look to move into less densely packed buildings.

Investors looking to capitalize on these trends should consider speaking with local investor friendly real estate agents to get local intelligence on what types of trends they are seeing in their markets.