As the impact of the COVID-19 global pandemic becomes apparent, and the vast majority of workers are now remote working, CFOs are working closely with their real estate teams to re-assess workspace costs both now and in the future.

In our discussions with global clients over the past two weeks, the key issue being referred to is the future footprint. There is a clear sense among CRE leaders that the pandemic has irreversibly changed how future space needs will be calculated.

One global bank last week suggested they would look to cut their fixed footprint by 70-80% when lease events allow over the coming years, and others are voicing 50-60% reductions.

As one global law firm client, based in Hong Kong, said last week: “The one major shift that I can foresee is that the current coronavirus outbreak will have long term ramifications on how businesses assess their future premises requirements.

“We have successfully operated with less than 10% of people in the office for over a month with the balance of people working from home – so what amount of office space do businesses really require and will they be willing to forego the potential cost savings by maintaining the traditional model? How flexible working space can meet this potential change in approach will be key.”

Grapple fans

CFOs and their CRE functions will now be grappling with:

What will the future role of the office be?
How well does our current portfolio meet the future operating model? (Location, size, functionality, flexibility etc)
What are the costs and barriers to change?
Is our IT system resilient enough?

The purpose of the office is currently being redefined. It’s no longer about coming to work to sit at a desk, but how physical space be used to augment the virtual interaction. If remote working is the new default, then an integrated solution is needed, with CRE, HR and IT functions combining to create a new proposition.