Companies Are Lowering Their Office Size Requirements Even as Employees Slowly Return

More workers are returning to the office, according to Kastle Systems’ 10-city Back to Work Barometer, which tracked office occupancy at 49% after the Thanksgiving holiday.

All 10 cities tracked increased in occupancy last week — Chicago, Dallas, New York City and Houston joined Austin as the four cities to reach occupancy above the 10-city average.

“We are continuing to see higher occupancy rates compared to the same time last year, confirming our prediction that office occupancy is on a steady incline,” Kastle said in a release.

Small Office Leases Up 32%

But even as offices are slowing staffing up, companies are downsizing their space needs, according to a recent CBRE report.

Companies are lowering their office size requirements. Although the number of US office leases in the first three quarters of 2022 was 14% higher than the pre-pandemic average, total square footage leased was down by 4%, according to CBRE.

CBRE reported that small leases increased by 32% and large leases decreased by 17%.

CBRE said that two factors are driving demand for smaller spaces: the smaller companies are leading the return to office and larger companies are reducing their sizes due to less office utilization and to save money.

Given the greater demand for smaller leases in high-quality buildings, CBRE said landlords should consider offering “plug-and-play” spec suites and flex space by subdividing large blocks of space to attract a larger pool of smaller tenants and improve leasing velocity.