Empty Desks: Over 26% of German Companies Contemplate Office Reduction
Approximately a quarter of businesses aim to diminish office space due to office vacancies
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Having more office space than required is a predicament faced by over a quarter of businesses in Germany, according to a survey conducted by the Ifo Institute. Around 26.3% of companies are finding their offices underutilized, prompting approximately 10% to already downsize, with an additional 12.5% planning to do so within five years. The common denominator? Underutilized offices due to work-from-home arrangements, suggests Ifo economist Simon Krause [1].
Since August 2024, the number of organizations scaling down has increased, as per the Ifo survey.
Sectors most affected by unoccupied desks include advertising & market research, film & television, and IT, with 60%, 59%, and 53% of firms reporting underutilized office space, respectively.
The survey's findings suggest that the current economic slump will exacerbate this trend, with Krause predicting years of continued activity in the office real estate market due to long-term lease agreements [1].
In a nutshell: The widespread shift toward remote work is driving companies to reconsider their office space needs, leading to the shrinking or restructuring of physical workspaces. The pressure to cost-cut, slowed economic conditions, and the reduced demand for office leasing in some cities all play a part in this trend. [2]
[1] ntv.de, dpa[2] Reuters, The Art of Coding[3] Statista
- The high proportion of unoccupied desks in the advertising & market research, film & television, and IT sectors is causing a reevaluation of employment, finance, and business in those industries, as many companies contingemplate reducing their office space due to technology-driven remote work arrangements.
- As a result of the increasing number of companies downsizing their office space, there may be a shift in employment patterns, with more people working remotely or in shared office spaces, potentially impacting the finance and business sectors as well as the technology industry.
