As Big Companies Shed Office Space, Big Cities Are Poised For Big Changes

One of the big questions the pandemic has posed: How many workers will keep right on working from home and staying away from the office when the COVID-19 crisis is over? The demand for office space could tank if working from home takes hold.

In fact, big customers such J.P. Morgan Chase & Co., Salesforce and PricewaterhouseCoopers are now looking to dump big blocks of office space, The Wall Street Journal reported today (March 30).

This new trend runs counter to the way office leasing has gone in the past, given that companies such as these are already doing well financially. They’re not scrounging for money.

The WSJ said that typically during a recession, struggling companies look to pull in additional cash by subleasing. At the end of 2020, 137 million square feet of office space was available for sublease across the U.S., according to CBRE Group. That was up 40 percent from a year earlier.

Now, however, numerous companies say they need less space because the plan is to allow more employees to work at least part of the time from home. That’s even after the COVID-19 health crisis ends.

This could seriously affect the demand for office space. The WSJ said that office rents for more expensive space, when factoring in concessions, fell around 17 percent over the past year in New York and San Francisco and 13 percent nationwide, according to real-estate firm JLL.

For its part, J.P. Morgan started marketing 700,000 square feet of office space in lower Manhattan earlier this year. The WSJ reported that this was the largest block of space available for sublease in Manhattan.

According to PYMNTS’ latest survey, 79 percent of remote workers say they are not eager to return to a physical office. What survey respondents say they’re eager to do: see their friends and family, travel internationally and go to the movies or sporting events.

PYMNTS data shows that many would often opt for working from home, even after getting the green light to return to the office.