Some German companies are reducing their office space due to remote work, according to new research conducted by Munich’s Institute for Economic Research, Ifo.
“Surveys show that 6.2% of all companies have already reduced their office space. Another 8.3% plan to do so within the next five years. This trend is particularly pronounced among service providers and large companies, which use the majority of office space. One in four of these companies has either reduced its office space or plans to do so,” said Simon Krause, a researcher at the Munich institute.
The percentage of people working from home in Germany has been stable for almost two years, with one-quarter of employees in two-thirds of companies.
“Despite calls from some companies to return to the office, regular remote work has become established, causing companies to gradually adjust their office space needs. Since leases are often signed on a long-term basis, the overall effect will only be felt over time. Based on our research, we expect demand for office space to drop by around 12% in the long run due to remote work,” Krause notes, adding that reducing office space presents a challenge for the tight real estate market.
According to him, combined with economic uncertainty, higher interest rates, and construction costs, a quick recovery is not in sight.
On the other hand, expanding office space due to remote work is quite rare. Only 0.5% of companies have increased their office space so far, and 2.5% plan to do so in the future.
The remaining companies have not made any changes to their office space and do not plan to do so in the future.