When smaller offices are worthwhile for companies

Icon image : Open plan office Getty Images The world of office work has changed since the beginning of the corona pandemic. With the increasing normalization of work processes in and from the home office, the question arises for companies whether office space could possibly be reduced in order to save rental costs. The auditing and consulting company PwC Germany published the study “More home, less office: when it pays to optimize space for users”

The following survey results were included in this:

On average, employers expect an increase in home office days 65 percent compared to pre-crisis level. Both employers and employees consider investments necessary to switch to even more home office. On average, a little more than half of the workforce (57 percent) about the necessary technical equipment. Employers expect an average investment of 768 euros per employee. There are also costs for meeting rooms and flexible desk sharing at the workplace. The employers put the upcoming renovation measures at average 218 Euro per square meter. Most of the companies assume that the number of employees will be reduced within the next three years: 45 percent expect a reduction of up to 15 Percent, 38 percent with a reduction of 16 until 20 Percent. This gives an average reduction of around 20 Derive percent. Were interviewed 100 German employers and 500 German employees from industry, trade and Service from August to September 2020. Based on their statements – briefly described – these three scenarios were developed:

# 1 The rental scenario According to the study, a reduction in space in the rental scenario is worthwhile starting with a reduction of eight percent. When reducing by 20 percent results in a cost saving of eight percent in the first ten years. In the event of a land reduction by 15 Percent, however, the costs for conversion measures should not exceed 630 EUR per square meter, and the lease should not have a remaining term of more than nine years.

# 2 Ownership scenario with renting to third parties In this scenario, according to the authors of the study, it is worthwhile to reduce space from around ten percent. A reduction by 20 percent leads to cost savings of around twelve percent in ten years. The conversion costs should, however, be a maximum of 700 Euro per Square meters, otherwise the investments exceed the savings.

# 3 Ownership scenario with sale and leaseback A so-called sale and leaseback can be useful if companies have a large need for liquidity and are willing to be tenants instead of owners. However, the profitability of this model is heavily dependent on the possible sales price. In the model calculation of the study, a reduction in area is worthwhile from around 20 percent.