June 2025
Leesman Research & Insights Team
It has been a tumultuous five years for the corporate real estate (CRE) sector. The pandemic, stay-at-home mandates and the mass take-up of hybrid working have seen traditional workplace strategies overhauled as new ways of working took hold.
Leesman has tracked this extraordinary period throughout via its annual CRE Leaders poll; the first survey was published in early 2021, amid a backdrop of lockdowns, ever-changing rules and work-from-home mandates.
The end of downsizing?
Every year, respondents are asked if they intend to downsize their real estate footprint in the next 18 months. In 2021, well over two thirds – 71% – said yes. Downsizing has been a constant theme ever since; every year at least 60% of respondents say they will be reducing their footprint in the next 18 months.
For some that reduction was expected to be ‘major’ (defined as by more than 50%); for others it was forecast to be either ‘considerable’ or ‘minor’ (less than 25%). But all agreed: their real estate footprint would shrink in the coming months.
This year’s poll and subsequent report, published in the first quarter of 2025 – confirmed downsizing was once again a key theme. Yet it also showed, for the first time, signs that the trend may have run its course.
A total of 68% of respondents confirmed they had completed some level of reduction in their real estate footprint over the past 18 months.
But looking ahead, and there was a striking shift. Just 49% said they planned to reduce their footprint, the lowest figure since the poll began. It was also a sharp decrease from 2024, when 67% of respondents said they planned to downsize.
Building back
What’s more, 12% said they expected to increase their footprint in the coming year and half. That compares to 8% in 2024 and 6% in 2021.
Those who said they would expand their footprint were asked how they planned to increase it (all were able to select more than one option). Based on their responses, long-term leases (>5 years) were the most favoured approach, selected by 63% of respondents, while 56% favoured medium-term leases.
A different approach to third spaces
The good news for flexible space providers is that one in four (25%) of those increasing their real estate footprint said they would begin new, or extend existing, partnerships with third space or coworking providers.
It is an interesting change in approach to these types of spaces. In 2021, 28% of respondents reported having a hybrid model that saw employees use offices, their home and some form of a third space; 57% said their staff were spread between office and home only.
In the intervening years, however, the pendulum has steadily swung in the other direction; in 2025, just 14% said workers were spread across home, office and third spaces, while 83% – the highest ever – said their hybrid model was exclusively home and office.
Nor is Leesman’s research an outlier here. Demand for flexible office space has traditionally been led by technology, media and telecoms firms. But CBRE’s Real Estate Market Outlook 2025 report, published in December 2024, noted an uptick in demand outside these sectors, including financial and professional services.
Looking ahead, the report said: “We expect the pool of occupiers to diversify further moving into 2025, with demand driven by several factors, including reduction in capital expenditure, solving for uncertain demand and providing space for temporarily displaced teams.”
Boosting the employee experience
The other key trend for CRE leaders going forward is a heightened awareness of employee experience.
There has been a significant improvement in employee workplace experience post-pandemic. The average Leesman Index workplace experience score (Lmi) was 64.3 across all workplaces measured in 2019. By 2024, the average Lmi was 69.5.
Yet the overall experience of working from home continues to surpass that of working in the office: the average home experience score (H-Lmi) in 2024 was 79.5.
The priority then for many organisations now is closing – or at least significantly narrowing – that gap.
How that happens will depend on an organisation’s ‘workplace why’, which is essentially the core reason(s) they maintain an office, specific needs of staff and the existing real estate portfolio.
But Leesman research has also long highlighted the key infrastructure elements that require attention when it comes to boosting the employee experience. They are myriad and diverse, ranging from ‘noise levels’ and ‘quiet rooms to working alone or in pairs’ to ‘temperature control’ and ‘tea, coffee and other refreshment facilities’. Even ‘Chair’, ‘Desk’ and ‘Monitor’ fail to satisfy around a quarter of employees, despite being the three most important features out the 56 included in our assessment.
Location location location
‘Leisure facilities onsite or nearby’ is another element that regularly scores poorly for satisfaction, at just 35%. Yet location is critical in a hybrid model, as employers are competing with higher-scoring homes which involve no commute.
Perhaps not surprisingly then, ensuring any new office space is in the best possible location is likely to be key for those who want to increase their footprint over the next 18 months. The CBRE Market Outlook expects the City of London to outperform all other markets in central London and the rest of the UK in 2025, largely due to locational factors such as accessibility to public transport and nearby amenities.
In a hybrid model, workplaces and homes need to provide parallel levels of employee experience. In other words, offices should merit the commute.
Takeaway
The worst of the pandemic is long over. Yet each year since 2020 has brought its own challenges, and 2025 is no different; once-high hopes for an improving global economy have been dampened by a potential global trade war and heightened geopolitical instability. Many CRE leaders, and the C-suite in general, will no doubt be more cautious and less optimistic than they were only a few months ago.
But even with that (admittedly significant) caveat, change is afoot in corporate real estate.
Forward Focus shows us that, for the first time since the pandemic, the great office downsize may well be over; as well as a far smaller 49% expecting to reduce office space this year, 33% said their footprint would remain unchanged going forward, compared to just 16% last year. And of those planning on reducing their footprint, 35% expect only ‘minor’ adjustments; not one respondent said there would be a ‘major’ reduction in real estate going forward.
Indeed, some are now even looking to expand office space. But they will not necessarily be replacing like for like.
Instead the focus is on innovative, flexible space that maximises the employee experience. CRE leaders recognise that the gap between the home and office experience is too broad, and needs addressing. They are therefore seeking to narrow it, be that through location – ensuring any new office space is near transport hubs and excellent local amenities – or by improving the in-office experience, from introducing flexible work spaces better suited to the task at hand to providing high-quality on-site services and facilities.
The office has not lost its value in a hybrid world. But when it comes to right-sizing real estate portfolios in the coming years – be that through either reduction or expansion – one thing is clear: quality matters.
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