Offices: homeworking will save employers billions

It is not easy being a finance director, reining in spendthrift chief executives. Now fate is handing them a windfall. Businesses ranging from JPMorgan to Reach, a UK media group, expect many staff to work from home most of the time. It is an opportunity to save billions.

Most white-collar toilers want to split working hours between home and office when lockdowns end. Expect bosses at businesses already suffering margin pressures — from banks to private equity portfolio companies — to cut offices down to size.

Jamie Dimon of JPMorgan said this week he anticipated that 10 per cent of staff would work full-time from home, more than 25,000 people. HSBC said 1,200 UK call centre staff would do the same. Last month, Daily Mirror publisher Reach announced that three-quarters of employees would work remotely.

Quick-and-dirty calculations point to big savings. Property consultants expect the requirement for office space to drop by about 10 per cent. But they tend to be optimists. A reduction of 20 per cent is more realistic. That is equivalent to 226m square feet in the UK, valued at £60bn in 2018.

Rents matter more to tenants. British business should save about £4bn a year here, equivalent to £30bn taxed and capitalised. A business paying £2.8m a year for 40,000 square feet in the City would be half a million better off.

Shrinkage in office estates will become clear as new working patterns emerge and leases roll off. One proxy for demand is space offered for subletting. Mat Oakley of real estate group Savills says the amount in central London has doubled in the past 12 months.

This is a testing time for bulls such as Axa, which has raised €799m to invest in offices. But where there is disruption, there are often bargains.

Note, finally, that mid-career professionals are keener on flexible working than trainees in bedsits. A finance director’s home is a much more comfortable place from which to lead the revolution.

The Lex team is interested in hearing more from readers. Please tell us what you think of office downsizing in the comments section below.