Grant Thornton: Businesses looking to trim office space

More than one third of UK mid-sized companies expect to reduce the amount of office space they hold in the future, according to the accountant’s survey of 275 business leaders.

Of the 39% of respondents who expect to reduce their space, 74% anticipate decreasing their existing footprint by up to a quarter. A further 12% expect to reduce their office space by up to a half.

While many businesses may be looking to reduce the amount of space they hold, the research shows that there is still a need and want for some corporate space – but how it will be used is likely to change.

The survey found that there was not a consistent view of how office space may be used in the future. Many anticipate a greater focus on more internal collaborative team activity, rather than regular desk-based activity, along with increased use as a meeting, event, and collaboration space for clients.

There was also an expectation from some that different departments and teams will visit the office on rotation on pre-determined days.

John Burgess, associate director of real estate at Grant Thornton, said: “Our research shows that as home working becomes the norm, and demand for office space reduces, businesses will be looking to scale back their property portfolios and optimise spaces to suit new working models.

“It’s clear that there is still a need for a corporate space and, while there has been much talk of the ‘death of the office’, what we’re seeing is more of an evolution. Teams still need to meet each other and many organisations will need dedicated space to meet clients and host events. The nature and purpose of office space is likely to change to accommodate the different ways of working, and there will be a focus on reducing space gradually over time.

“There is also likely to be a shift from habitual daily desk-based working, to a much greater focus on planned collaboration time with teams and with clients. This change in working style, which is expected to continue to some extent post-pandemic, provides a chance for companies to reimagine their offices and create spaces for their people, clients, customers and stakeholders to use collaboratively, and more strategically.

“The split view across respondents as to how they anticipate their space being used going forward also demonstrates the need for bespoke solutions. Businesses need to ensure that any review of their space, and how they use it going forward, meets both the needs of their people – which are likely to have changed over the last year – and the unique requirements of their business.”

Landlords have new flexible workspace operators and software tools to help them adapt to the flexible workspace revolution. Mark Furness, CEO of essensys, global provider of technology for running flexible workspaces, explains: “The world of real estate is fundamentally changing, because remote working has revolutionised the culture of work entirely. No longer is the traditional business model, and way of working, fit for purpose – now commercial landlords must provide office spaces that are more experience focussed, customisable for individual businesses and accommodate flexible working. The days of landlords offering a long-term lease on a standard-built office are over. The future of real estate is flexible, as more and more businesses of all sizes demand space that facilitates a hybrid business model, accommodating both office and home working. Offices will remain a fixture the world-over, but they must be adapted to reflect the times we now live in.”

The Grant Thornton International Business Report is a survey of mid-market businesses. Questionnaires are translated into local languages and fieldwork is undertaken on a biannual basis, through both online and telephone interviews. The data for this survey was from interviews conducted between October and December 2020 with chief executive officers, managing directors, chairpersons or other senior executives from all industry sectors. The survey included 275 UK respondents. The UK mid-market is categorised as companies with revenue between £15m and £1bn.