Why Companies Aren’t Cutting Back on Office Space

In our monthly surveys of 5,000 American workers and 500 U.S. employers, and in our numerous conversations with managers, a huge shift to hybrid work is abundantly clear for office and knowledge workers. An emerging norm is three days a week in the office and two at home, cutting days on site by 30% or more. You might think this cutback would bring a huge drop in the demand for office space. But our survey data suggests cuts in office space of 1% to 2% on average, implying big reductions in density not space. We see three reasons for this. See more HBR charts in Data & Visuals First, high density at the office is uncomfortable. Many workers dislike crowds around their desks, much more so now that infection risks are top of mind. Discomfort with density extends to lobbies, kitchens, canteens, and especially elevators. The only sure-fire way to reduce density is to cut days on site without cutting square footage as much. Discomfort with density is here to stay according to our survey evidence. See more HBR charts in Data & Visuals Second, most employees want to work from home on Mondays and Fridays. Faced with tight labor markets and the ever-present challenge of attracting and retaining talented workers, many employers have opted to meet this demand. Working from home on Mondays and Fridays is becoming accepted practice at many leading firms. As a result, the shift to hybrid affords only meager opportunities to economize on office space. See more HBR charts in Data & Visuals Third, because employers are hard pressed to attract and retain talent — and to bring that talent onsite — the office of the future must be more inviting. Tightly packed cubicles are out. Spacious, lounge-style, open seating plans are in. So are meeting rooms that accommodate a mix of in-person and remote participants. Sound-proofed cubicles to handle Zoom and Skype calls and the like are also on the rise. In short, employers are reshaping offices to become more inviting social spaces that encourage face-to-face collaboration, creativity, and serendipitous interactions. A recent report by CBRE, a global real estate services firm, highlights many of these trends, including the shift to office layouts that foster collaboration. Accenture, for example, has introduced tech-free “reflection zones,” yoga and wellness areas, and comfortable, lounge-like conference rooms with sweeping vistas. Salesforce has converted executive offices into small-group conference rooms open to all employees, replaced desks with couches, expanded dining areas, and installed white boards for collaborative team activities. It’s also easier to bring employees to the office when the local environment is rich in amenities — restaurants, bars, entertainment opportunities, and cultural venues. What does all this mean for city centers? Because they remain central to local transport networks, cultural activities, and high-quality entertainment, established city centers are the most natural location for the office of the future. They just won’t draw as many office workers per day — especially on Mondays and Fridays.

Why Companies Aren’t Cutting Back on Office Space

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