Senior Client Partner, Sector Leader, Professional Services
The Always-Empty Desks
Even as people have returned to the office, a curious trend is occurring: they’re not returning to their desks.
A new report estimates that a surprising 36% of desks and cubicles in offices around the globe are unoccupied all week. Among the ones that are in use, 29% are deployed for only three hours or less on a given day. To many experts, it’s a glaring sign not only of too much real estate, but also of inefficient office layouts. “You have situations like twelve empty offices and two filled conference rooms,” says Juan Pablo González, sector leader of Korn Ferry’s Professional Services practice.
Indeed, while many desks lie unused, meeting spaces do not. Conference rooms and smaller enclosed meeting rooms are occupied during 67% of the workday, according to a spring 2023 survey by Australian workplace-sensor provider XY Sense. The firm looked at nearly 25,000 work areas across nine countries, including the United States and United Kingdom.
The low office-usage rate comes at a time when people are slowly resuming on-site work for a few days a week. From April to June, overall average office-space utilization was 30%, up from 27% in the three months prior. There’s a “truly incredible amount of wastage” in the commercial real estate market, writes Shivaun Ryan, XY Sense’s head of customer success.
Of course, companies have always battled to use space better. But experts point to statistics indicating that even oft-occupied spaces might not be sized properly. Big conference rooms, when they’re used, have an average occupancy of 41%; smaller meeting rooms are 60% full. In contrast, meeting rooms sized for two to three people are 90% full on average, according to XY Sense.
The figures come at a critical time for the real-estate industry leaders and executives who make workspace decisions for their companies. According to a recent survey from the International Workplace Group, 74% of CFOs plan to reduce office space as a cost-cutting measure, with 65% of them targeting savings of at least 10%.
There’s also about $1.2 trillion in US commercial real-estate debt that is “potentially troubled” because of declining property values and unoccupied spaces, according to real-estate advisory firm Newmark Group. Offices are the biggest near-term problem, accounting for more than half of the $626 billion of at-risk debt that’s set to mature by the end of 2025, the brokerage estimates. Anthony LoPinto, global sector leader of Korn Ferry’s Real Estate practice, says defaults are certain to increase. “This is just the tip of the iceberg,” he says.
It’s not just a financial matter, either. Leaders maintain that remote work is hurting productivity and are demanding that employees return to the office. These executives have some recent evidence to back that assertion up. Compared to in-person work, fully remote work is associated with a drop of 10% to 20% in productivity, according to an analysis by the Stanford Institute for Economic Policy Research.
However, it’s difficult for groups to work together when there are no open rooms where they can gather. Sometimes that’s even the case when important new projects are being launched. “All meeting spaces are booked,” says Andrés Tapia , Korn Ferry’s diversity, equity, and inclusion global strategist.
Experts say this points to companies and landlords having to make major—and potentially costly—changes to their offices. There needs to be a greater emphasis on creating more team spaces, conference rooms, and collaboration spaces. Large meeting spaces should be broken down into multiple smaller spaces. Even then, some buildings may struggle to attract occupants because they don’t have modern amenities or environmentally conscious design. “Older real estate is going to suffer more from occupancy issues than newer buildings,” LoPinto says.
Learn more about Korn Ferry’s Real Estate Consulting capabilities.