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76% of US CEOs Will Slash Office Space As Remote Work Dominates 

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76% of US CEOs Will Slash Office Space As Remote Work Dominates 

Tyler Durden

Sun, 10/25/2020 – 13:00

The virus pandemic has accelerated more flexible work options for employees, with many companies instructing employees to work remotely through 2021, or in some cases, permanently. As a result, according to a new survey, CEOs have said they will slash office space, a move that could ripple through commercial real estate markets, all the way down into local economies. 

In collaboration with Deloitte, Fortune surveyed 171 CEOs between Sept. 23 to 30, found 76% of respondents are expected to reduce office space size in the near term. About 28% of them said they would need “a lot less” corporate space. 

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The survey is an eye-opener for all the empty office buildings in major metro areas as remote work continues to dominate. The prolonged economic downturn and persistent virus pandemic are whipping up a perfect storm where companies must reduce their corporate footprint. 

Remote working, continued virus pandemic, social unrest, and a surge in violent crime have contributed to a mass exodus of city dwellers who have escaped to suburbia. Among CEOs surveyed, 40% said remote working has increased productivity. Inversely, 31% of CEOs said remote working decreased productivity. 

Corporate America scaling back on office space will continue to pressure certain CMBS tranches that are heavily weighted with office buildings, suggesting as remote working continues, for at least the next 6 to 12 months, building operators could experience slumping rental income, resulting in missed mortgage payments and could send deliquesces soaring. 

CMBS Deliquesces Remain Elevated 

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The scale-back of corporate space because of remote working will also damage local economies that surround business districts. This will be a mass hit to gas stations, restaurants, and other shops, who depend on commuters, will see less and less traffic for the next few years. In July, we noted remote working would remove some 14 million cars from American highways. 

The bad news here is that a commercial real estate crisis looms. 


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About The Author

Tyler Durden

Zero Hedge's mission is to widen the scope of financial, economic and political information available to the professional investing public, to skeptically examine and, where necessary, attack the flaccid institution that financial journalism has become, to liberate oppressed knowledge, to provide analysis uninhibited by political constraint and to facilitate information's unending quest for freedom. Visit https://www.zerohedge.com

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