Five years on

Date

January 2025

Author

Dr Peggie Rothe

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Leesman will shortly publish its fifth annual Corporate Real Estate (CRE) Leaders Poll.

Launched in 2021, the annual survey for senior real estate leaders has charted an unprecedented time in corporate real estate.

The first poll was carried out as companies emerged from a year of lockdowns. More would follow before all stay-at-home orders were finally lifted. But the 2021 survey provided unique insight into the immediate impact on the corporate real estate market of the pandemic, lockdown and working from home.

Perhaps the most startling statistic was about real estate intentions. Asked if they intended to downsize their real estate footprint in the next 18 months, well over two thirds – 71% – said yes.

Since then, downsizing has remained a constant theme of the poll: every year, at least 60% of respondents said they would be reducing their footprint in the next 18 months. For some that reduction is expected to be ‘major’, (defined as by more than 50%); for others it is forecast to be ‘considerable’, while for some it will be a ‘minor’ change, so by less than 25%.

But all agreed: their real estate footprint would shrink in the coming months.

The last poll, published in the first quarter of 2024, was no exception to this trend. In total, 67% said they expected to reduce their footprint. Within that, 2% said it would be a ‘major’ reduction, 24% said it would be between 25% and 50%, and the biggest group, 41%, said it would be ‘minor’. Only 16% said the footprint would remain unchanged, and just 8% expected to increase it.

So what is driving the reduction? Without a doubt, it is hybrid working.

According to Leesman Office surveys from 2024, 87% of respondents now work in a hybrid way, with 63% spending between one and three days in the office a week. Compare that to 2019, when just 63% of respondents worked in a hybrid way.

The days of commuting Monday through Friday, already in decline before the pandemic, are over.
The wide-ranging effects of this shift have been well documented. As smaller towns and suburbs benefited from people working from home, so city centres and central business districts suffered a slide in footfall. Companies are quitting long-held leases as they seek out office space more suited to their post-pandemic needs, or in different locations. Take for example HSBC’s decision in 2023 to quit the 45-storey Canary Wharf tower bearing its name after 25 years, for smaller premises in the Square Mile.

For employers, the rise of hybrid working hasn’t just affected how much real estate they occupy, however. It has also prompted them to re-evaluate workplace strategies. With so many offices now under-utilised, the response has been two-pronged: reduce the real estate footprint, but also make the office space that is retained work harder.

The office remains an important part of workplace strategies; just what is asked of it is changing.

For example, activity-based working (ABW) is gaining traction. But rather than just doing away with assigned desks and hoping for the best – as was too often the case when ABW was last in popularity – the most dynamic employers are taking a more involved approach, with impressive results. Leesman research shows that offices which opt for an unassigned strategy while also offering a wide variety of space – to encourage and accommodate formal and informal interactions and collaboration as well as quiet, focused work – regularly score highest in employee experience.

The 2025 CRE Leaders Poll will revisit these two fundamental areas: real estate intentions and hybrid working adoption.

Once again it will ask respondents how their real estate footprint will change over the next 18 months. And it will ask what their organisation’s approach is to return to office, including how often employees are expected to work on site. But it will also ask respondents, for the first time, how their real estate footprint has changed over the last 18 months, to assess how intentions became reality.

The poll has provided regular insight during a time of radical change. The focus now is whether those changes are continuing at pace – or if, five years post initial lockdown, the market has found a new normal, of smaller footprints, embedded hybrid working and refreshed workplace strategies.

The last five years have been unparalleled for the corporate real estate market. But while challenging, the post-pandemic era has heralded new trends and introduced exciting opportunities for both employers and employees to bolster productivity, improve collaboration and re-set the work-life balance.

The next five years promise to be just as interesting.