Reducing Office Spaces Galore: Over 26% of German Companies Opt for Trimming Unused Space
Nearly a Quarter of Businesses Eager to Shrink Office Space Due to Empty Spaces
Employing a more economical approach, several companies in Germany are considering paring down their office spaces due to the mounting number of vacant workstations. A survey conducted by the Munich-based Ifo Institute revealed that an astonishing 26.3 percent of companies find their offices to be underutilized. In response, about 10 percent have recently opted for smaller workspaces, and a further 12.5 percent plan to do so within the following five years. An expert economist from the Ifo Institute, Simon Krause, elucidates that the primary cause for this transition is the surge in work-from-home algorithms [1].
Compared to August 2024, the proportion of companies that have already made the shift toward smaller offices and those intending to do so in the upcoming years has evidently risen, as per the Ifo survey [1].
The industries with the highest percentage of vacant desks include advertising, market research, film, and television, as well as IT services. An astounding 60 percent of companies offering services in advertising and market research report underutilized offices, not far behind by 59 percent in film and television and 53 percent in IT services [2].
In the foreseeable future, economically trying times are expected to reinforce the trend of smaller offices. Given Krause's prediction, the market for office real estate will remain active, buffeted by long-term lease agreements [2]. The Ifo Institute conducts business cycle surveys monthly, interviewing thousands of companies across Germany [3].
Sources: ntv.de, dpa
Enrichment insights:
- Underutilization of office space is a prevalent issue in service industries, including advertising, market research, film, television, and IT.
- Economic uncertainty and the need for modernization are significant factors driving the trend toward downsizing.
- Germany has a thriving AI-focused tech startup scene, potentially balancing the demand for specialized office spaces despite the overall trend of downsizing.
- The real estate market in major cities like Munich is experiencing volatility, with concerns over occupier confidence and high-specification office fit-out costs.
- As companies continue to adjust to remote work trends and economic uncertainty, the finance sector could witness an increase in employment opportunities for real estate analysts, due to the ongoing downsizing of offices in various sectors like advertising, market research, film, television, and IT.
- With technology playing a pivotal role in modernizing businesses and enabling remote work, there is a possibility that employment in data analytics and tech support services could rise, as companies reconfigure their business models amidst the shift towards trimming office spaces.
