The post-coronavirus era in the corporate world has been defined by a tug of war between employees and employers over returning to the office. Amid a wave of new mandates from big companies, bosses appear to be the winners.
However, now, the Big Four accounting firm EY could tip the balance back toward long-term worker flexibility through a potential commitment to long-term hybrid working.
The partnership is reportedly looking to give up its London Bridge office – its home for the past 20 years – in the latest blow to corporate real estate as companies adapt to the demands of workers.
the telegraph And Bloomberg It stated that the accounting firm is considering evacuating the huge 10-storey building near London Bridge, which houses 9,000 employees, citing people familiar with the matter.
EY has begun a property review of its UK headquarters at Moor London, believing fewer people are working in the office, the publication reported.
The reported review comes ahead of the end of the group’s 25-year lease at More London in 2028. The review is still in its early stages and is expected to take into account occupancy levels, according to the publications.
EY moved to a hybrid model in the UK in 2021. This gave employees the freedom to work remotely at least two days a week, with the expectation that they would work at client sites or in the office the rest of the time.
Moore’s London office is understood to now be operating at 88% occupancy on Tuesdays and Thursdays, the publication said, citing people familiar with the matter.
Bloomberg EY was considering moving to a green building to help achieve its goal of being carbon neutral by 2025, it reported, citing one person.
An EY representative said luck: “As a growing business with over 20 offices across the UK, we are constantly reviewing our real estate footprint. We do not comment on speculation.”
Shrinking office space
Expensive real estate has been a big incentive for companies trying to bring their employees back to their offices, especially those that had long leases before the pandemic hit. But other major companies are starting to vacate their office space as they either embrace hybrid working opportunities or pivot to cut costs.
In June, global banking giant HSBC said it planned to move from its iconic Canary Wharf headquarters, which is Times of London Reported for the first time.
The group, which has nearly 8,000 staff in the 45-storey building, said it expects to move to central London in 2027 amid a drive to reduce global office space by 40%.
In September, Meta terminated its lease on office space in central London 18 years ahead of schedule, citing an inability to occupy it. The move cost Mark Zuckerberg’s company £149 million ($181 million).
Plans to downsize or abandon office space have been a major headache for London property companies, which face years of painful adjustment to the new future of work.
In September, investment bank Jefferies said London was experiencing a “rent stagnation” as vacancies in the city reached a 30-year high. Reuters mentioned.
A June report by Capital Economics predicted a 35% decline in office values by 2025, a decline that is unlikely to be recovered from until 2040.
The consulting firm’s forecasts are far from outlandish. The head of real estate brokerage CBRE said the value of commercial real estate in the United States could fall another 10% on top of the initial 15% to 20% decline.
Gary Schilling, the economist who predicted the housing market collapse in 2008, described commercial real estate as a bubble about to burst.
“This isn’t as big as the subprime boom, but I think it’s a bubble that’s starting to crack,” Schilling said on an investment podcast. Julia Laroche Gallery.