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More Companies Shifting Office Strategies, CBRE Finds
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(Illustration courtesy of CBRE)
More companies are shifting their office portfolio strategy toward expansion after focusing on contraction since the pandemic, according to a new CBRE survey.
CBRE examined 225 companies with offices in the U.S., Canada and Latin America for its 2024 Occupier Sentiment Survey. It found the percentage of office-using companies that anticipate expanding their occupied space in the next three years increased to 38% from 20% in 2023. Those planning to reduce their portfolio requirements decreased to 37% from 53% last year. Twenty-five percent expect their portfolios to remain the same.
Some companies that may have trimmed too much space in recent years or have added staff now find their offices cannot accommodate employees on high-attendance days, the report noted.
“An 18-percentage-point year-over-year increase in companies anticipating expansion of their office footprints is a significant step toward a return to growth,” said Manish Kashyap, CBRE Global President of Advisory & Transaction Services. “It bodes well for a U.S. office market, which has faced many challenges in recent years.”
While some companies are beginning to increase the amount of space they occupy, the high costs of moving and building out new space are motivating others to stay in place, CBRE said. Eighty percent of respondents whose current space fits their needs say they are exploring or executing renewals. “Those who prefer to stay in place are typically renegotiating their existing leases to take advantage of the current market conditions, which favor tenants,” the report said.
One common theme: a preference for high-quality office space. Led by large companies, nearly 60% of companies are relocating for reasons associated with upgrading space, such as a better location, better quality space or improved employee experience.
The survey also looked at company office-use patterns. Sixty-four percent of companies reported office attendance is at a steady state – up modestly from 60% in 2023 and 43% in 2022.
“It’s possible we’re past the peak of the office-downsizing trend. Even as companies embrace hybrid work, they see a need for high-quality office space,” CBRE Global Head of Occupier Research Julie Whelan said. “The evolution of office spaces and the significance of amenities are vital in creating an employee experience that can’t be duplicated by remote work.”