Office space race begins as credit crunch tightens grip

Many employers are planning sweeping cuts to their workspaces to cope with the tightening economic squeeze, according to property experts.

The UK cities monitor 2008 report by estate agent Cushman & Wakefield in September found that a quarter of companies expected to reduce space requirements to cut costs. One-fifth intended to consolidate staff into one building, while almost 10% were considering moving to cheaper premises.

Tracey Byer, head of UK tenant representation for commercial agent DTZ, said many in-house and contracted property management teams for large employers were already searching for cheaper alternatives.

“People are now looking to reduce occupancy costs,” she told Personnel Today. “Many groups had anticipated growing headcounts, and as we get deeper into the credit crunch [and growth plans are put on hold], there’ll be more space returned to the market, which is ideal for tenants.”

This is not just a private sector problem, Byer added. A survey of 86 local authorities by DTZ found 90% had a property portfolio where the majority of buildings were more than 20 years old. She said there could be a flurry of moves in the near future as councils searched for cheaper and more energy-efficient workplaces.

Lee Elliott, head of corporate research at professional services firm Jones Lang LaSalle, added: “[Companies] are taking a long, hard look at their property portfolio, and corporate real estate teams are monitoring the market, looking at cheaper options,” he told Personnel Today. “If you can go to your board and offer a 40% saving, you’ll be the flavour of the month.”

An industry guide by corporate property firm CoreNet estimated that current employee-to-space ratios were about 1:100 sq ft. Elliott said halving that ratio would be more efficient, but would require a “fundamental change in working culture”.

Duncan Brown, director of HR services at PricewaterhouseCoopers, said workplace moves could result in improvements in flexible working.

“This is where a prescient employer could kill three birds with one stone, offering cost efficiency, improved commuting and attractiveness to those who can’t work nine-to-five.”

However, Claire McCartney, CIPD adviser for organisation and resourcing, warned that HR should ensure their employer didn’t make any knee-jerk reactions. Cramping employees into smaller spaces could cause some to leave, which would cost more to deal with in the long term, she said.

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