Potential Savings Through The Home Office Trend

In the medium to long term, employers expect an average increase in home office days of 65 percent compared to the -crisis level. As a result of this development, companies could reduce office space and realize significant savings potential.

These are the results of the study More home, less office: When it pays to optimize space for users by the auditing and consulting company  Germany. IT surveyed a total of 100 German employers and 500 German employees across the industry between August and September 2020. In the study, It also developed space scenarios that show the conditions under which a reduction in rented office space or property is worthwhile for companies.

The majority rate the move to the home office positively

The vast majority of the employers and employees surveyed (72 percent) describe the switch to the home office as successful. The home environment apparently has a positive effect: Both a majority of employers and employees rate productivity in the home office as unchanged or higher. Almost all respondents also assume that productivity will reach its old level after less than four months as soon as a practicable home office model becomes established in the respective company

Another study result: employers expect an increase in home office days from an average of 2.0 to 3.3 days per week. At the same time, employees would like to work from home more often in the future. Before the start of the corona virus pandemic, only 22 percent of employees worked regularly in the home office; In future, more than seven out of ten respondents want to do this (71 percent).

Employers need to invest in equipment and IT training

Investments cannot be avoided when converting to home office. This is also a result of the PwC study. On average, a little more than half of the workforce (57 percent) have the necessary technical equipment for the home office. Employers expect investments averaging EUR 950 per employee. The company and employees agree that investments must be made in better hardware and IT training in order to improve collaboration, says David . In addition, with the long-term changeover to more days in the home office, there are costs for meeting rooms, digital infrastructure at the workplace and flexible desk sharing. The employers surveyed put the necessary renovation measures at an average of 220 euros per square meter.

Companies see potential for savings in office space

Those who let employees work from home more often generally require less office space and can theoretically save costs. A majority of the companies (60 percent) expect an average reduction in office space of around 20 percent within the next three years - with the same number of employees. Rita Marie Roland, Director of Real Estate Deals at Germany, says: It has become clear to many companies in recent months that space has to be reduced. But whether this actually results in long-term savings potential surrender, there is still a lack of clarity. A reduction in space initially entails high initial investments. The savings potential is largely influenced by the renovation costs, the remaining term of the lease and the rent.

When it is worthwhile for companies to reduce space

PwC has developed scenarios to decide when and under what conditions it is worthwhile for companies to reduce space. These differentiate whether the space is rented or owned. In the rental scenario, companies have the option of letting existing rental contracts expire, terminating them early or sublet space. According to the study, a reduction in space in the rental scenario is worthwhile starting with a reduction of eight percent.

For the ownership scenario, there is the option of a classic sale and leaseback. According to the analysis, the concept can be economically attractive if companies have an increased need for liquidity and at the same time are ready to no longer be the owner but rather the tenant. Area reductions are only worthwhile from around 30%. However, the profitability of sale and leaseback is essentially dependent on the sales proceeds that can be achieved.