The trend could be bad news for office-building owners, who have struggled with high vacancy rates and low rent growth in many cities since the most recent recession.
Chicago real-estate firm Jones Lang LaSalle Inc. asked the real-estate directors of 50 major corporations, who together control more than two billion square feet of office space, to rate their best options for cutting their real-estate costs. The top choice for 37 percent of the executives was telecommuting and hoteling, in which employees don't have assigned desks, leaving fewer seats unoccupied. Two years earlier just 6 percent picked that option.
Experts have been predicting a boom in telecommuting for years. Still, the spread of broadband and wireless Internet access and mobile phones has made working out of the office far easier. Technology businesses pioneered flexible work arrangements in the 1990s and services firms such as PricewaterhouseCoopers followed in the years since. Now even consumer-products companies such as Procter & Gamble are following suit.
Besides increasing productivity and collaboration among their workers, companies are able to squeeze their operations into less space by adopting policies such as hoteling, in which a worker has no assigned desk but checks in when in the office and is assigned one. That helps mitigate the problem of "dark space" — desks sitting empty when workers are on the road, working from home or on vacation.
Pressed to slash costs in the past few years, companies have unloaded surplus space. That was the top cost-cutting opportunity in the 2003 survey, when 44 percent of executives chose it. It fell to 30 percent in 2005.
Consolidating multiple offices into fewer locations is an additional priority, one that is harder than trimming a floor or two of space without moving. Still, about 19 percent said consolidation offers the best cost-reduction possibilities, compared with 23 percent in 2003.
By dumping excess space and consolidating offices, companies are running the risk that they won't be able to expand when or if business picks up. Two years ago, 12 percent of executives surveyed reported that their companies' surplus space was less than 5 percent of the total amount they leased. In this year's survey, 54 percent of executives said their surplus space was less than 5 percent.
Relying on hoteling and telecommuting allows companies to breathe more easily even if they have less space to put new workers if they need to expand. Many companies are luring new talent by offering a flexible workplace, including a day or two of working from home a week, thereby saving office space.
