Almost half of big MNCs plan to cut office space in next three years

A survey by Knight Frank shows that major groups are aiming to reduce space by 10-20%

About 50 per cent of large multinational companies (MNCs) are planning to cut their office space in the next three years as they are looking to adapt to an increase in work from home since the Covid-19 pandemic, said a Financial Times report.

Knight Frank surveyed executives in charge of real estate departments at 350 companies across the globe. It reported that among major groups cutting their footprint, majority was aiming to reduce space by 10 to 20 per cent.

Lee Elliott, a commercial real estate expert at Knight Frank, said that a better but less space is probably the strapline for larger organisations.

Companies cutting down their office space has created worries about the future of older buildings and unpopular locations, as the commercial property market negotiates a painful downturn due to high interest rates.

Elliot said that many companies have to wait for their leases to expire before making such changes.

Companies are taking different approaches to a hybrid working structure. BlackRock, an investment company, last month instructed all employees to work from the office four days a week, following JP Morgan’s decision in April this year to ask senior staff to work in person full time.

Roughly a third of companies have opted for fully or mostly in-person work, according to Knight Frank research, which covered companies worldwide in industries ranging from tech to financial services. Around 56 per cent of companies have settled on a hybrid policy, while about 10 per cent plan to be mostly or entirely remote.

A study by Savills, one of the world's leading property agent companies, reported that US cities such as San Francisco and Washington DC will have the most surplus office space in the next decade, while the Asian market will be tighter and Europe will “sit in the middle of the pack”.

Cushman & Wakefield, a commercial real estate services firm, reported that in London, companies reported a record number of office moves last year but took less space than the pre-coronavirus average.