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July 24, 2020 01:00 pm
Original Link: http://rss.slashdot.org/~r/Slashdot/slashdot/~3/hf7sDuqYr4k/who-still-needs-the-office-us-companies-start-cutting-space
Who Still Needs the Office? US Companies Start Cutting Space
An anonymous reader quotes a report from Reuters: 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. Energy company Halliburton Co said it intends to close more than 100 facilities. Financial services company State Street Corp said it is going to nearly double the workers assigned to one office before adding additional space, based on the assumption that a significant portion of its workforce will continue to work from home even after a vaccine for COVID-19 emerges. Bedding company Sleep Number Corp plans to slow the growth of its total square footage as more consumers shop online. Analysts say the plans to cut back on real estate are likely the first wave of cost-cutting measures to hit office workers as companies try to maintain margins going into what may be a long recession. So far, the majority of the 14.7 million U.S. jobs lost during the pandemic have been in hard-hit areas such as restaurants, travel and retailers. Reductions in office spending could likely be followed by layoffs and investments in technology that should help improve productivity with a reduced workforce, said Bill McMahon, chief investment officer of active equity strategies at Charles Schwab. According to Morgan Stanley, vacancy rates in New York will reach 10%-12% in the next two to five years from 8.7% now, while San Francisco will reach 7-9% from 5.8%. "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," adds Reuters. "That reduction in necessary space will most likely hurt real estate investment firms with large exposures in cities such as San Francisco and New York as workers are expected to be given more freedom by employers to live in lower-cost areas away from the coasts."Read more of this story at Slashdot.
Original Link: http://rss.slashdot.org/~r/Slashdot/slashdot/~3/hf7sDuqYr4k/who-still-needs-the-office-us-companies-start-cutting-space
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