Will remote working spur office rental savings across Europe?
With CFOs and financial leaders predicted to move up to a fifth of their workforce to remote work permanently, how much will SMEs save, and how will offices be affected?
Industry-leading health and safety consultants Arinite have collected data and analysed the Gartner survey on remote work, along with office rental and vacancy rates across Europe, to reveal the cost-savings that SMEs could make with the move towards homeworking.
London took the top spot, with office rental savings predicted to be anywhere between €163,388 and €653,552 for the average SME downsizing an office by 5% to 20%.
Savings for a downsizing SME in Paris could range from €102,190 to €408,760 yearly, a significant saving considering that the lower office vacancy rates of 4.9% drive rent costs above other European cities higher on the Financial Sector Index, such as Geneva and Frankfurt.
Geneva could become even more popular for SMEs looking to relocate, as the yearly savings of €70,836 – €283,345 could offset the costs of €610 per square metre of office space.
Robert Winsloe, managing director at Arinite, says: “Since the Gartner study last year, we’ve had many months of working from home, and our analysts suspect that if they did the survey again, the number would be much higher than 5%.
“From our own figures, ranging from 5% to 50% planned reductions in office size, we predict the average company will move 20% of their staff to permanent remote working.”
These changes to office culture may positively impact SMEs looking to move locations. However, companies that have recently signed lease agreements, and then suddenly found themselves no longer needing the space, could be tied in for several years.
For the UK, the move to remote working could also hinder the success of the infrastructure development HS2, which aims to connect the capital to Birmingham and Manchester, if businesses no longer require employees to travel up to London.
Robert Winsloe adds: “Several companies are planning to adopt working from home and renting a space just for team meetings. Arinite (as an SME) has been operating that way since its formation in 2011.”
Another Gartner survey from February this year revealed that 76% of customer service and support functions have 80% to 100% of their staff working from home. On top of this, 89% of service leaders predict that 20% to 80% of their workforce will still be working from home within two years.
“At the most extreme end of working transformations, there is an opportunity not just to reduce the cost of office space but to eliminate it completely, and then shift this cost to improving home working environments.
“There are massive implications for the inevitable reduction in demand for office space. Initially, it will result in dramatic reductions in office space costs. Eventually, though, as the market reacts, a lot of office space will be converted to residential, demand and supply for office space will rebalance, and the prices will start to rise again. While not definite, this process could take around five years.”
View the full piece here to see more on SME rental savings across Europe.